Indonesia's Q4 GDP growth accelerates to 5% year on year

The Indonesian economy grew 5.02 percent in the fourth quarter of 2021, slightly faster than expected. This is thanks to high commodity prices and the relaxation of anti-virus restrictions, according to data released by the statistics bureau on Monday., reports Reuters.

Indonesia’s economy expanded at a rapid pace in 4Q21, with GDP growth increasing to +5% yoy (3Q21: +3.5% yoy), exceeding the market consensus (+4.9% yoy).

The stronger-than-expected growth was aided by a rebound in domestic spending activities as a result of the relaxation of the stringent Covid-19 restrictions, as well as tax breaks.

During the fourth quarter, all demand components contributed positively to economic growth. The country maintained its trade surplus, owing to rising foreign trade and high commodity prices.

Strong growth

Indonesia’s economy grew at a slower rate of +1.1 percent qoq (3Q21: +1.6 percent qoq), but slightly faster than market expectations (+1 percent qoq). Overall, Indonesia’s GDP increased by +3.7 percent in 2021 after contracting by -2.1 percent the previous year.

The stronger growth, which was in line with the government’s projections of between 3.7 percent and 4.5 percent, was primarily driven by strong domestic consumption and rising external demand compared to the previous year, when economic activity was hampered by the lockdown measures.

“We anticipate that Indonesia’s economy will continue to expand in 2022, supported by recovering domestic economic activity. Certain headwinds, such as the recent outbreak of the Omicron variant, may, however, slow the recovery process,” says MIDF.