Despite Predicted Slowdown, Indonesia's Economy Grew 5.03% in Q1 2023

According to a report by the Central Statistics Agency (BPS), Indonesia's economic value, based on the current price Gross Domestic Product (GDP), reached Rp5,071 trillion in the first quarter of 2023.

Measured by the 2010 constant price GDP, Indonesia's economy in the first quarter of 2023 reached Rp2,961 trillion, growing by 5.03% compared to the first quarter of 2022 (year-on-year/yoy).

In the first quarter of this year, growth occurred across all economic sectors. The fastest-growing sector was Transportation and Warehousing, with a growth rate of 15.93% (yoy).

This was followed by Accommodation and Food Services at 11.55% (yoy); Other Services at 8.90% (yoy); Information and Communication at 7.19% (yoy); Corporate Services at 6.37% (yoy); and Manufacturing at 4.43% (yoy).

The structure of Indonesia's economy in the first quarter of 2023 also did not experience any significant changes.

Indonesia's economy is still dominated by Manufacturing, contributing 18.57%; followed by Wholesale and Retail Trade, Repair of Motor Vehicles and Motorcycles at 12.95%; Mining and Quarrying at 11.85%; Agriculture, Forestry, and Fisheries at 11.77%; and Construction at 9.88%.

Cumulatively, these five sectors contributed 65.02% to the national economy.

Indonesia's economic growth in the first quarter of 2023 remained quite stable at around 5%, not far from the pre-pandemic condition, as shown in the graph above.

Growth was also achieved despite projections of a slowdown from several international institutions.

The International Monetary Fund (IMF) projects that Indonesia's economic growth will slow to 5% this year.

The World Bank predicts that Indonesia's economy will only grow by 4.9%, while the Organisation for Economic Co-operation and Development (OECD) is more pessimistic, predicting a growth rate of 4.7%.

In general, these three institutions also forecast a slowdown in the global economy this year.

"Short-term economic growth will depend on global growth, which is projected to slow in 2023," said the World Bank in its April 2023 East Asia and the Pacific Economic Update report.

"Although the latest projections show higher optimism, and commodity prices have become more moderate, financial tightening is likely to continue given inflationary pressures in the United States," it added.