Indonesia Growth Accelerating

Economic data released so far this year shows a pick-up in the growth of Indonesia’s economy. The government collected more taxes in the first quarter this year than it did in the same period last year, while the growing number of capital goods and raw materials suggest bustling investment and manufacturing activities.

Motorcycle sales expanded at their quickest rate in four years in the last quarter of 2017, as purchasing power recovered across the country, in line with rising prices of the country’s main commodities like coal and palm oil, Bernama reported.

Finance Minister Mulyani Indrawati said she estimates gross domestic product to expand by 5.2% in the first quarter this year from the same month a year ago, which would be the country’s fastest expansion in the last four years. The World Bank and the Asian Development Bank both expect the largest economy in Southeast Asia to expand by 5.3% this year, picking up from a near 5% pace in the past four years.

Taxes and excise revenue jumped 10% to Rp 262.4 trillion ($19 billion) in the first quarter from Rp 237.9 trillion in the same quarter last year. “The revenue shows encouraging growth as it also shows that our economic pulse is beginning to increase,” Mulyani said at a press conference in Jakarta. “The government will continue to maintain this momentum, which I would say is on the right track.”

The main source of the increase in tax revenue was attributed to Indonesia’s commodities sector, which experienced price rebounds in the past year.

The Indonesian coal benchmark price was set at $101.86 per ton for the month of March, its highest since May 2012.

Those commodities and robust shipments of manufacturing goods helped increase non-oil and gas exports to $44.3 billion from January to March, up 8.8% from the same period last year.

Sales of cars in the first quarter this year was recorded at 291,920 units, up 2.8% from 283,760 units in the same period last year, data from the Indonesian Automotive Industry Association shows. Motorcycles sold from January to March also increased to a total of 1.46 million units, up 3.8% from 1.4 million units within the same period last year, reversing a downward trend , according to data from the Indonesia’s Motor Association.

A survey by Indonesia’s central bank, Bank Indonesia, showed that the consumer confidence index  in March was 121.6, still above the minimum confidence level of 100.

President Joko “Jokowi” Widodo, who is up for re-election next year, went as far as reversing his policy in fuel subsidies to ensure cheap fuel and electricity until the end of 2019 and to support consumer purchasing power.