GDP growth picks up in Q4

Growth improved slightly in the fourth quarter, with GDP increasing 5.0% on an annual basis (Q3: +4.9% year on year). A rebound in both public spending and exports spearheaded the acceleration. Q4’s figure brought full-year growth to 5.0% in 2023 (2022: +5.3%), in line with market expectations but below the government target of 5.3%.

Government consumption grew 2.8% in Q4 (Q3: -3.9% yoy), rebounding largely thanks to surging election spending. In contrast, household spending growth fell to 4.5% in Q4, marking the weakest expansion since Q1 2022 (Q3: +5.1% yoy). Fixed investment growth also waned to 5.0% in Q4, from 5.8% recorded in the prior quarter. On the external front, exports of goods and services supported the overall acceleration, growing 1.6% year on year in the fourth quarter (Q3: -3.9% yoy). Meanwhile, imports of goods and services declined at a softer pace of 0.1% in Q4 (Q3: -6.8% yoy).

UOB analysts Enrico Tanuwidjaja and Agus Santoso commented on the outlook: “We expect Indonesia’s economic growth to rebound slightly higher in 2024 on the back of faster and bigger government spending that may likely boost domestic demand. In addition, we also see steady prospects in exports as global demand stabilizes and could improve later this year, lending support towards commodity prices.” EIU analysts said: “In 2024 we expect the economy to continue its current pace of growth, with the same drivers. Private consumption is expected to maintain its current momentum. With the central bank expected to cut interest rates twice […], household and investment spending is likely to accelerate then. The general and presidential elections, scheduled for February with a potential second round in June, will also address some uncertainties that could hinder investment decisions.”

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