- December 28, 2024
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Indonesia's Economic Growth Slows in Q2
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The Indonesian economy demonstrated resilience in the second quarter of this year, maintaining a growth trajectory, albeit at a reduced paceRecent data released by the Central Bureau of Statistics (BPS) revealed a year-on-year growth rate of 5.05% for Q2, a modest decrease from 5.11% in Q1 and a dip from 5.17% recorded in the second quarter of 2023. This slower growth raises ongoing questions about the evolving economic landscape in the country.
According to Eddie, the deputy director of the BPS's balance sheet and statistical analysis division, the contribution of various sectors to economic growth saw notable changes in Q2. The manufacturing sector, which has historically been a significant driver of economic expansion, contributed 0.79% to growth, down from 0.86% in Q1. Similarly, the construction sector's contribution slipped from 0.73% in the previous quarter to 0.67% in Q2, while the telecommunications sector's contribution decreased slightly from 0.56% to 0.5%.
When contrasting current data with the second quarter of 2023, the decline in contributions from key segments stands out
For instance, the manufacturing sector delivered a robust contribution of 0.98%, with construction providing 0.8% during that same periodAdditionally, consumer and government spending, which are critical to sustaining economic activity, contributed just 0.1% in the current Q2, significantly lower than the 0.72% seen in the previous year.
Despite these setbacks, the overall composition of the economy showed positive growth across all sectors in Q2. Key areas propelling this growth included manufacturing, agriculture, trade, construction, and miningThe manufacturing sector emerged as the strongest support, growing by an impressive 3.95%. Other high-growth sectors included hospitality, transport and warehousing, and various service industries, collectively marking a significant uptick in economic activities.
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Exports surged by 8.28%, significantly higher than the 0.50% growth in Q1, primarily driven by increased valuation and quantity of both oil and non-oil productsThis resurgence underscored Indonesia's enhanced competitiveness in the global market, especially regarding energy and manufactured goodsOn the other hand, imports rose by 8.57%, spurred by a rise in raw material purchases, reflecting robust domestic production activity and an expanding manufacturing sectorA deeper dive into the statistics reveals that exports constituted 21.4% of the Gross Domestic Product (GDP), surpassing imports at 19.88%. This surplus presents a favorable trade balance, contributing positively to economic growth.
Analysis also uncovered trends in household consumption by non-profit organizations, which outpaced growth rates observed in other componentsThough not as staggering as the 24.29% rate noted in Q1, Q2 still achieved a commendable 9.89%. In stark contrast, government consumption experienced a sharp slowdown, plunging from 19.9% to merely 1.42%.
Year-on-year, household consumption registered a growth of 4.93%—a marginal increase from 4.91% in Q1, though still trailing behind figures from the same period in 2022 and 2023, which stood at 5.52% and 5.22%, respectivelyRelevant to these trends was the influx of long holiday weekends, which significantly boosted economic activity across various sectorsEddie highlighted this impact on industries linked to transportation, communications, and hospitality services, indicating how vacation-related spending reveals the seasonal and cyclical characteristics of consumer behavior.
