Jakarta, CNBC Indonesia– Indonesia’s economic growth in the third quarter of 2023 is expected to slow down in line with the decline in public consumption and exports.
The Central Statistics Agency (BPS) will announce economic growth data for the third quarter of 2023 on Monday (6/11/2023).
Gathered market consensus CNBC Indonesia of 12 institutions estimates economic growth to reach 5.03% (year on year/yoy) and 1.71% (quarter to quarter/qtq) in the third quarter or July-September 2023.
For the record, Indonesia’s economy grew 5.17% (yoy) and 3.86% (qtq) in the second quarter of 2023. Meanwhile, the Indonesian economy grew 5.73% (yoy) and 1.83% (qtq) in the third quarter of 2022.
The poll results are in line with the projections of the Minister of Finance, Sri Mulyani Indrawati, who believes that Indonesia’s economic growth in the third quarter of 2023 will still grow above 5%.
If Sri Mulyani’s projections and consensus CNBC Indonesia If this becomes a reality, for eight consecutive months the Indonesian economy will grow above 5%.
Historically, growth in the third quarter is usually lower than the second quarter because people are starting to put the brakes on spending. Consumption contributes around 56% to the total Gross Domestic Product (GDP), so the rate of consumption will greatly determine Indonesia’s economic growth.
The exception occurred in the third quarter of 2022 where growth shot up 5.73% due to the effects of the collapse in growth the previous year due to the Delta variant.
Growth in the third quarter of 2023, especially public consumption, will be very different compared to the second quarter of 2023. One of them is because there are no long holidays or religious holidays in July-September 2023. Two Eids, namely Eid al-Fitr and Eid al-Adha, took place in the April-June period this year.
This slowdown in consumption has been reflected in a number of economic indicators. Referring to Bank Indonesia data, the real sales index grew (yoy) by 1.6% in July, 1.1% in August, and 1.0% in September. This growth is far below that in the July-September 2022 period, which was always above 5%.
Data as of September 2023 even shows that there are three groups experiencing contraction, namely information and communication equipment, other household equipment, and cultural and recreational goods.
Sales of other groups also experienced drastic declines, including food, beverages and tobacco.
The Consumer Confidence Index also continues to slope from the range of 126-128 in the third quarter of 2023. The index was recorded at 123.5 in July 2023 and 125.2 in August 2023. The index even touched 121.7 in September 2023, which was the lowest level so far this year.
Car sales in the third quarter of 2023 were recorded at 249,185 units or a decline of 12% compared to the same period last year. However, motorbike sales in July-September 2023 will still increase. Sales were recorded at 1.52 million units, an increase of 11.3% compared to the same period last year.
From the production side, the Manufacturing PMI rate also began to decline in the third quarter of 2023. The PMI at the end of September was even recorded at 52.3, which was the lowest level in the previous four months.
In line with consumption, the rate of investment is also starting to slow down. Data from the Investment Coordinating Board (BKPM) shows that investment realization in the third quarter of 2023 reached IDR 374.4 trillion.
Investment is still growing at 21.6% (yoy) but the growth is still less than in the third quarter of 2022 which reached 42.1% (yoy).
Another growth driver, exports, also collapsed. Indonesia’s exports were recorded at US$ 63.62 billion in July-September 2023, falling 18.65% compared to the same period last year.
The slowdown in exports is the impact of the weakening prices of Indonesia’s mainstay commodities, from coal to Crude Palm Oil (CPO). The slowing economy of trading partners, such as China, also puts pressure on exports.
In contrast to consumption and exports which are expected to slow down, state spending is expected to be able to support the economic growth from July to September 2023. Data from the Ministry of Finance shows that state spending in the third quarter of 2023 absorbed IDR 712.2 trillion or an increase of 6.3% compared to the third quarter of 2022.
Bank Mandiri chief economist Andry Asmoro explained that the increase in spending came from the acceleration of infrastructure projects.
“During the second quarter of 2023, the pace of government spending improved, especially for capital spending related to national strategic projects and the National Capital,” said Andry, to CNBC Indonesia.
According to the Ministry of Finance’s records, capital expenditure in the third quarter of 2023 was absorbed at IDR 65.3 trillion or an increase of 31.1% compared to the same period the previous year.
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[Gambas:Video CNBC]
2023-11-05 09:00:00
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