LPEM UI Economist: Predicted Economic Growth Of 5.07 Percent In The Second Quarter Of 2022

Illustration. (Photo: Doc. Antara)

JAKARTA - Economist of the Institute for Economic and Community Research, Faculty of Economics and Business, University of Indonesia (LPEM FEB UI) Teuku Riefky projects that Indonesia's gross domestic product (GDP) will grow 5.07 percent year on year in the second quarter of 2022.

"Household consumption is likely to grow even more in the second quarter of 2022 due to the momentum of Ramadan and Eid al-Fitr. At the same time as demand recovery, credit continues to increase," he said in a statement in Jakarta, quoted by Antara, Thursday, August 4.

Investment realization in the second quarter of 2022 was recorded as the highest in the last decade with the manufacturing sector as the main contributor, indicating that investor confidence is still very high in Indonesia.

The trade surplus in the second quarter of 2022 which reached 15.6 billion US dollars has also dampened the impact of monetary tightening on capital outflows and the depreciation of the rupiah as higher exports than imports indicate greater foreign exchange liquidity in the market.

"The soaring commodity prices have brought positive momentum to exports because Indonesia is a net exporter of major energy commodities. The surplus in goods trade then pushed up the current account surplus," he said.

The declining foreign ownership of financial assets so far has given Indonesia ample room to absorb global shocks compared to other countries, especially in terms of inflation and currency volatility.

In terms of inflation, although rising, Riefky assessed that Indonesia's inflation, which was recorded at 4.94 percent year on year in July 2022, remained relatively moderate compared to other countries.

"We see that the gloomy condition of the global economy is not visible in domestic economic conditions. The windfall from the surge in commodity prices allows the government to expand fiscal stimulus to reduce inflation while building recovery momentum. Thus, consumption and production activities will continue to run safely," he said.