Bank Indonesia: Domestic Economy Grows High Amid Global Slowdown

Illustration (Photo: Doc. Antara)

JAKARTA Bank Indonesia (BI) stated that Indonesia's economic growth remains high amidst the slowdown in the global economy. Data from the Central Statistics Agency (BPS) shows that Indonesia's economic growth in the second quarter of 2023 was recorded at 5.17 percent year on year (yoy).

Head of the BI Communications Department Erwin Haryono said the figure increased from growth in the previous quarter of 5.04 percent (yoy).

"In the future, Bank Indonesia will continue to strengthen the synergy of the government's fiscal stimulus with a macroprudential stimulus of Bank Indonesia to encourage economic growth, especially in terms of demand," he said in a press statement quoted on Tuesday, August 8.

Erwin explained that high economic growth was supported by increased domestic demand. Household consumption grew by 5.23 percent (yoy).

"This is happening in line with the increase in mobility, improving income expectations, controlled inflation, and the positive impact of National Religious Holidays (HKBN), as well as giving the 13th salary to State Civil Apparatus," he said.

According to Erwin, government consumption grew by 10.62 percent (yoy), mainly driven by spending on central government and local government employees. The overall investment growth increased to 4.63 percent (yoy), driven mainly by improvements in non-construction investment as reflected in the improving growth in capital goods imports.

In addition, building investment also grew positively along with the continued infrastructure development in various regions.

"However, overall exports have contracted by 2.75 percent (yoy), especially exports of goods in line with the weakening of the global economy, in the midst of strong-growing export services supported by an increase in foreign tourist visits," he said.

Furthermore, Indonesia's high economic growth is also reflected in terms of business and spatial fields. In terms of Business Fields (LU), all LU in the second quarter of 2023 recorded positive growth, mainly supported by the manufacturing, wholesale and retail trade, as well as transportation and warehousing industries.

Meanwhile, spatially, economic growth in the second quarter of 2023 was recorded in most parts of Indonesia. The highest economic growth was recorded in the Sulawesi-Maluku-Papua (Sulampua) region, followed by Kalimantan, Java, Sumatra, and Bali-Nusa Tenggara (Bali Nusra).

"Bank Indonesia estimates that economic growth in 2023 will reach around 4.5 percent to 5.3 percent," concluded Erwin.