Indonesia’s Economic Growth Holds Steady at 5 Percent in Q1

A bird's eye view of Sudirman Central Business District in Jakarta, Indonesia, on Feb. 5, 2021. Ajeng Dinar Ulfiana/Reuters

Indonesia’s economy grew by 5.01 percent from January to March 2022 compared to the same period a year earlier, matching the 5.02 percent growth rate seen in the fourth quarter of 2021, according to data released by the country’s statistics agency on May 9.

Growth in the first quarter was mainly supported by a recovery in consumption, investment, and exports. Data showed that exports of goods and services increased by 16.22 percent in the first quarter.

Rising prices for global commodities such as coal, palm oil, and nickel also contributed to Indonesia’s large trade surpluses, as the country is a major supplier of these resources.

Margo Yuwono, head of Indonesia’s statistics bureau, said that more than half of the country’s gross domestic product (GDP), or 65.74 percent, was derived from the industrial, trade, agriculture, mining, and construction sectors, local media VOI reported.

“The high economic growth rate in this first quarter, apart from the recovery in community economic activity, also occurred due to the low-based effect in the first quarter of 2021 where we know that the Indonesian economy in the first quarter of last year experienced a contraction of 0.7 percent,” Yuwono said.

Yuwono stated that the lifting of COVID-19 restrictions has also resulted in a significant increase in economic activity and consumption, including travel.

Private consumption, which accounts for over half of Indonesia’s GDP, increased 4.34 percent in the first quarter of 2022, up from 3.55 percent in the fourth quarter of 2021.

“Indonesia’s economic growth at the beginning of this year was lower than the fourth quarter of 2021 with a contraction of 0.96 percent,” Yuwono said.

Data showed that increased activity resulted in a lower unemployment rate of 5.83 percent by February 2022, down from 6.26 percent the previous year. The rate, however, was still higher than the pre-pandemic level of 4.94 percent.

In April 2022, Indonesia banned the exporting of cooking oil and raw materials to tackle domestic shortages and control surging cooking oil costs.

Trade Minister Muhammad Lutfi said in April that the export ban will last until prices of bulk cooking oil drop to 14,000 rupiahs (97 cents) per liter. Trade Ministry data showed that the retail price for bulk cooking oil was about 18,000 rupiah ($1.24) at the time of the announcement.

Reuters contributed to this report.