A corner of Jakarta, Indonesia. (Photo: AFP/VNA) Data released by BPS on May 5 show that the country’s GDPgrowth in the first quarter of this year is 0.02% higher than that of thefourth quarter of 2022, while a Reuters poll had expected the GDP to expand4.95%.
Although analysts expect Indonesia's economic momentum tocool down as commodity prices fall and central banks around the world continueto maintain a tight monetary policy that affects global demand, Indonesia'spost-pandemic recovery is still underway thanks to a boom in commodity exports.
Economists said that the Indonesia’s central bank – Bank Indonesia(BoI) tightened monetary policy including raising interest rates by a total of225 basis points from August 2022 to January 2023 to combat inflation, whichhad affected domestic demand. However, stable macroeconomic policies are helpingthe Indonesian economy to make positive changes.
Statistics show that the inflation index in the most populouscountry in Southeast Asia has been well controlled. The BoI has paused monetarytightening measures in the last two months. Some economists expect the bank tokeep interest rates unchanged for the rest of the year. However, some analystsbelieve that to support the economic growth momentum, the BoI will likelyloosen monetary policy later this year.
In the first quarter of 2023, household consumption growth,which accounts for more than half of the GDP in Indonesia, increased slightlyto 4.54% from the rate of 4.48% in the previous quarter. Meanwhile, governmentspending increased by 4% compared to the fourth quarter of 2022./.
