Indonesia’s economy decelerated in the third quarter as harsh lockdowns to contain a record spike in COVID-19 cases outweighed higher commodity prices and trade.
GDP in the quarter rose 3.51 percent from a year earlier, Indonesia’s statistics bureau, Badan Pusat Statistik (BPS), announced yesterday, down from 7.07 percent growth in the second quarter, as the virus wave peaked in July and August.
That below the median estimate of 3.88 percent in a Bloomberg survey of economists and the government’s projection of 4.5 percent.
Photo: Bloomberg
“Third-quarter growth slipped below market consensus, as mobility curbs implemented during the period likely weighed on consumption, offsetting robust exports” said Nicholas Mapa, a senior economist at ING Groep NV in Manila. “We expect better fourth-quarter GDP results as movement restrictions have been relaxed further.”
Indonesian stocks extended declines after the report, with the Jakarta Composite Index falling as much as 0.2 percent. The rupiah was down 0.4 percent to 14,388 rupiah to the dollar as of 9:41am in Jakarta.
Authorities had ordered people to stay home and shut most businesses in the third quarter as the highly infectious Delta variant of SARS-CoV-2 sent caseloads skyrocketing, inundating hospitals and spurring a race to vaccinate 1 million people per day.
GDP growth for the July-to-September period was 1.55 percent compared with the previous quarter on a non-seasonally adjusted basis, lower than the 1.9 percent seen by economists.
Public activity and domestic tourism during the period declined both from a year earlier and the preceding quarter, BPS head Margo Yuwono told a news conference.
Meanwhile, the global economic recovery improved, including in trade partner countries, while commodity prices rose, he said.
While consumption and foreign direct investment stalled due to the outbreak, soaring prices of commodities have been a lifeline for Indonesia, a top exporter of coal and palm oil.
Outbound shipments hit an all-time high in August, while the trade surplus surged to more than US$4 billion in the third quarter.
Exports in the third quarter rose 51 percent from a year ago to US$61.4 billion, the statistics office said, while imports rose 47 percent to US$48.2 billion.
Southeast Asia’s largest economy expects the recovery to regain pace this quarter as the outbreak is brought under control and movement curbs are relaxed.
Improved manufacturing activity and retail sales should add to export momentum and drive full-year GDP, which the Indonesian Ministry of Finance last month said it expects to grow at 4 percent. The government had earlier set a target range of 3.7 to 4.5 percent for the year.
“Resurgent consumption alongside a strong export rebound should figure in a strong finish for the year,” Mapa said.
Bank Indonesia said it would keep its policy interest rate at a record low until the economy is on steadier footing, likely deferring any increase until late next year.
The central bank also could maintain looser policy on down payments for home and auto purchases until 2023 to spur lending.
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