Lowered Palm Prices Become A Sumber Of The Reduction Of Sumatra's Economy

Illustration (Photo: Doc. Ministry of Finance)

JAKARTA Economic growth in the Sumatra Island region fell to 4.71 percent year on year (yoy) in the third quarter of 2022 from the previous 4.95 percent in the second quarter of 2022.

Coordinating Minister for the Economy Airlangga Hartarto said the cause of the decline in the growth rate was due to a weakening in terms of Sumatra's important sources of income.

"We see that Sumatra has experienced a decline in the economy caused by the start to decline in palm oil prices," he said when giving an explanation to the media crew, quoted on Tuesday, November 8.

According to Airlangga, similar conditions were also experienced by several other regions. Airlangga added that the largest palm oil production center in Indonesia is in Sumatra which is certain to have the most significant impact on the formation of regional gross domestic product (GDP).

"The price of palm oil is now at the level of US$720, while last year the price was still above US$1,400. So indeed the economy of Sumatra is very dependent on plantations," he said.

Citing data reported by the Central Statistics Agency (BPS), it is known that the main area that supports Sumatra's economy in the third quarter of 2022 is North Sumatra with a contribution of 1.14 percent.

Followed by Riau 0.99 percent, South Sumatra 0.74 percent, Riau Islands 0.44 percent, Lampung 0.42 percent, Jambi 0.34 percent, West Sumatra 0.33 percent, Aceh 0.12 percent, Bangka Belitung Kep. 0.10 percent, and Bengkulu 0.09 percent.

Meanwhile, the region with the highest growth in Indonesia was achieved by Sulawesi Island with 8.24 percent. Meanwhile, the largest national GDP contribution is still occupied by Java Island with 56.3 percent support and economic growth in the last quarter of 5.76 percent.