Indonesia Reports Strong GDP Figures

Indonesia posted strong economic figures for the second quarter of this year, despite pressure from higher US interest rates and consecutive rate hikes from the country’s central bank.

Badan Pusat Statistik, the country’s central statistics agency, on Monday said gross domestic product had grown by an inflation-adjusted 5.27% on an annual basis in the three months to June, rising from the 5.06% growth seen in the first three months of the year, Nikkei reported.

The latest figure was above a consensus forecast of 5.16%, according to a Reuters poll, and marked the fastest pace of growth since the fourth quarter of 2013.

The performance for the second quarter came despite the country suffering from capital outflows as a result of higher US interest rates, as well as Bank Indonesia raising its benchmark interest rate by 100 basis points between mid-May and the end of June.

This was down to the second quarter including the fasting month of Ramadan and the holiday marking its conclusion, the times of year when Indonesians spend the most.

Private consumption, which accounts for over half of GDP, grew by 5.14% year on year, with the statistics agency attributing the growth to an increase in spending on restaurants and hotels as well as food and beverage.

That growth in private consumption was spurred by the government’s move to bump up holiday bonuses for government workers, leading to a rise in government spending of 5.26%.

“The result is encouraging and good enough, but still below Indonesia’s GDP growth target of 5.4%,” BPS chief Suharyanto said. “It is necessary to increase GDP in the next quarter to achieve the target.”