Indonesia’s economic growth accelerated in the second quarter of 2022 despite global uncertainty, driven by exports and the easing of Covid-19 restrictions, official data showed on Friday.
Southeast Asia’s largest economy recorded 5.44% year-on-year growth in the April-June period. This represents a slight increase from 5.01% recorded during the first quarter, indicated by the Central Statistics Agency. Exports, which account for a quarter of gross domestic product, rose 19.74% as commodity prices soared after Russia invaded Ukraine. “Disruption to the global supply chain has led to higher prices for Indonesia’s key commodities, resulting in a boon to export performance“explains Margo Yuwono, director of the statistics agency.
The easing of Covid-19 restrictions across Indonesia and increased spending during the Muslim holiday marking the breaking of the fast in the month of Ramadan were also a boost for domestic consumption, Ms. Yuwono. The 5.51% bond in domestic consumption, which accounts for more than half of the economy, has been aided by government welfare payments to low-income households.
740,000 visitors in the first half
However, Gareth Leather, an analyst at Capital Economics, believes growth is expected to slow in the second half of the year, due to lower commodity prices and despite a boom in tourism after Indonesia’s borders reopened. “While the increase in tourist arrivals should give a further boost to GDP in the third quarter and beyond, the boost given by the reopening of borders is largely over“says Gareth Leather in a note.
“In addition, the recent decline in commodity prices, as well as slowing global growth, will dampen exports.“, he adds. Indonesia dropped its quarantine requirements in March for all travelers with a negative PCR test, leading to a spike in tourist arrivals. The country welcomed more than 740,000 visitors in the first half, an increase of more than 900% compared to the first six months of the previous year.