LPEM FEB UI Projects Indonesia's GDP To Grow In The Range Of 4.97-5.01 Percent In The First Quarter Of 2024

Illustration. (Photo: Doc. Antara)

JAKARTA - The Institute for Economic and Community Research, Faculty of Economics and Business, University of Indonesia (LPEM FEB UI) estimates that the value of Indonesia's Gross Domestic Product (GDP) will grow in the range of 4.97 percent to 5.01 percent year-on-year (yoy) in the second quarter of 2024.

"GDP is estimated to grow 4.97 percent to 5.01 percent yoy in the second quarter of 2024 and 5 percent to 5.1 percent for the fiscal year 2024, driven by the lack of seasonal driving factors and high domestic and global uncertainty," said LPEM economist FEB UI Teuku Riefky, quoted from Antara, Saturday, August 3.

He said that the Indonesian economy in general weakened relatively in the second quarter of this year compared to the previous quarter.

According to him, this is due to the absence of seasonal factors that trigger economic activity, high global uncertainty, and continued structural problems, which have a negative impact on GDP growth.

"Furthermore, uncertainty regarding policy directions by future governments also encourages people to tend to withhold consumption and investors to wait-and-see," he said.

Not only a wait-and-see attitude, Riefky stated that domestic policy uncertainty along with the transitional government and global uncertainty due to sentiment related to the move by the United States central bank the Fed also triggered capital flows out in the quarter.

These factors resulted in depreciation of the value of the rupiah up to 6.33 percent year-to-date (ytd) by the end of June 2024 and the possibility of slowing down GDP growth in the second quarter of 2024.

Even so, he said that Indonesia's GDP growth could still be raised by the improving trade balance performance in the quarter.

The trade surplus was recorded at around 8.04 billion US dollars supported by rising global demand and prices for several commodities.

Riefky said that this value increased on an annual basis by around 2.82 percent yoy and increased by about 8.42 percent from the previous quarter (quarter-to-quarter/qoq).

In addition, GDP growth in the second quarter of this year was also driven by increased investment realization thanks to high foreign investment (PMA), which reached IDR 217.3 trillion, or grew 6.3 percent yoy.

Meanwhile, the total realization of foreign and domestic capital investment in the second quarter of 2024 was IDR 428.4 trillion, or an increase of 6.7 percent yoy and 22.5 percent qoq.

"We also estimate that GDP will grow by 4.99 percent with an estimated range from 4.97 percent to 5.01 percent in the second quarter of 2024 and 5.1 percent for the fiscal year 2024 with an estimated range of 5 percent to 5.1 percent," he added.

The Central Statistics Agency (BPS) is scheduled to announce the release of the Official News of Statistics on Indonesia's Economic Growth in the Second Quarter of 2024 on Monday, August 5.