Household Consumption Increases For Bank Mandiri Pede Ekonomi RI Grows 5.4 Percent In 2023

Illustration of the increasing economic movement (Photo: dock. Antara)

JAKARTA - Bank Mandiri Chief Economist Andry Asmoro estimates that Indonesia's economic growth until the end of 2023 will be 5.04 percent.

Andry explained this can be seen from economic growth in the second quarter of 2023 which reached 5.17 percent, which indicates a continued increase in household consumption, investment and government spending.

"This positive trend is also driven by increased public consumption, especially during the holiday period of Hari Raya, national strategic projects and improving investor confidence," Andry said at the Bank Mandiri Economic Outlook for the Third Quarter of 2023, Tuesday, August 22.

Andry added that this positive growth was also followed by an increasingly controlled inflation rate and gradually showed a decline.

On an annual basis, he said, the inflation rate was recorded at 3.08 percent year on year (yoy) in July 2023. This position decreased when compared to the position in June 2023 which had touched 3.52 percent.

The inflation rate has returned to Bank Indonesia's target this year, in the range of 2 to 4 percent. Good food supply management and falling global commodity prices also support the rate of decline in inflation, especially in terms of food prices," explained Andry.

Meanwhile, Indonesia's trade balance performance still recorded a surplus even though the trade surplus continued to show a decline as commodity prices normalized and also increased imports in line with domestic economic recovery.

"With the performance of the trade balance, we estimate that the Working Transaction Balance (NTB) or Current Account Balance will again record a deficit of 0.65 percent of GDP in 2023," Andry continued.

In addition, data showed during the first seven months of 2023, the trade balance surplus was recorded at US$21.2 billion, a decrease compared to the surplus in the same period last year of 29.1 billion US dollars.

"Seeing the improving trend of Indonesia's economic growth, we believe economic growth can reach 5.04 percent in 2023," said Andry.

On the other hand, indicators show that foreign capital flows have re-entered the Indonesian bond market in line with Indonesia's fundamental economic optimism which is still very good.

During the first semester, net buys of foreign investors in the bond market amounted to Rp 84 trillion.

"We believe that foreign investors will still return to Indonesia in the fourth quarter when the US benchmark interest rate (Fed Fund Rate) has reached its peak in September," he said.

Moreover, he said, currently foreign ownership in Government Securities (SBN) reaches 15.6 percent of the total, higher than its lowest position at around 14 percent. "Bank Mandiri's Economist Team views that the potential yield of SBN will be able to return to the range of 6.1 to 6.3 percent in 2023 with the potential foreign capital inflows," concluded Andry.