Jakarta, Indonesia Sentinel – The Indonesian economy remains on a solid path and shows resilience with the achievement of economic growth in the second quarter of 2024 of 5.05 percent (yoy).
The growth rate was also supported by low and controlled inflation at 2.13 percent in July 2024. In addition, the economic growth rate is also higher than a number of other countries, such as China (4.7 percent), Singapore (2.9 percent), South Korea (2.3 percent), and Mexico (2.24 percent).
“Especially for Indonesia, the two international institutions also see that Indonesia can reach 5.1 to 5.2. This also proves that our projected economic growth is relatively resilient to geopolitical conflicts, supply chain disruptions, and developments from exchange rate fluctuations,” said Coordinating Minister for Economic Affairs Airlangga Hartarto at the Indonesia Economic Growth Quarter II 2024 Press Conference at the Coordinating Ministry for Economic Affairs Office, Monday (5/8/2024).
Furthermore, on the expenditure side, growth in Q2-2024 was supported by the household consumption component of 4.93 percent (yoy) and Gross Fixed Capital Formation (PMTB) of 4.43 percent (yoy) as the main contributors to GDP. Meanwhile, the highest growth was experienced by consumption of Household Non-Profit Institutions (LNPRT) of 9.98 percent (yoy).
The achievement of the expenditure side was driven by the implementation of a number of Government policies ranging from Government Borne Value Added Tax (PPN DTP) incentives for the housing sector and the motor vehicle sector, especially electric motor vehicles to stimulate the middle class, optimizing the implementation of cheap market operations and / or cheap food movements (GPM), distributing medium rice through the SPHP program, as well as the construction of National Strategic Projects (PSN) throughout 2024 as many as 41 PSN which are targeted to be completed.
Furthermore, in terms of business fields, the main contribution to GDP is still supported by the processing industry which grew 3.95 percent (yoy). Meanwhile, the highest growth was obtained by the food and beverage accommodation sector which grew by 10.17 percent (yoy) driven by national and international events. In addition, the transportation and trade sector also had high growth of 9.56 (yoy) driven by mobility, export-import shipments, and increased tourist visits.
Spatially, all regions in Indonesia also continued to strengthen with the dominance of the largest contribution to national GDP coming from Java, reaching 57.04 percent. Significant economic growth was also achieved by several regions such as Maluku Papua region 8.45 percent driven by processing industry, mining and quarrying, Bali and Nusa Tenggara 6.84 percent driven by mining and quarrying, agriculture, fisheries, and forestry, and Sulawesi 6.07 percent driven by agriculture, fisheries, forestry, and processing industry.
On the occasion, Airlangga also said that several consumption indicators also showed a positive trend. The increase was seen in consumption credit by 10.4 percent, core inflation was also under control at 1.9 (yoy) in May 2024, the Consumer Confidence Index (CCI) was 123.3 in May 2024 and increased market liquidity (M2) by 7.8 percent.
Then in the external sector, the majority of global exchange rates experienced depreciation throughout 2024, although the value of changes in Indonesia’s exchange rate in January – August 2024 was still better than South Korea and Taiwan. Meanwhile, in the midst of various global challenges and uncertainties, Indonesia’s external resilience is relatively good as reflected in the trade balance that has experienced a surplus, increased tourist visits, and maintained high foreign exchange reserves.
On the investment side, there was Foreign Direct Investment (PMA) of IDR217 trillion and Domestic Direct Investment (PMDN) of IDR211 trillion. Then, a number of rating agencies including S&P, Moody’s, Fitch, and JCR consider Indonesia to still be in investment grade with a stable outlook and has solid economic growth prospects, external resilience and a manageable government debt burden, supported by a credible monetary and fiscal policy framework.
To ensure economic stability and resilience in the future, a number of policies have been prepared by the Government, starting from downstreaming, infrastructure development, continuing OECD accession, Indo-Pacific Economic Framework (IPEF), developing panga center areas, and encouraging digitalization, one of which is by developing semiconductors.
“Of course we maintain programs related to social protection, microfinance, and KUR. Then nutritious lunch development rather than rehabilitation of primary schools inpres development of food barns through food estates,” Airlangga concluded. (InfoPublik)
