Just as the pace of Indonesia’s economic growth returned to pre-COVID-19 pandemic levels, a slowing global economy has emerged as the biggest threat to sustaining that performance.
GDP growth accelerated 5.31 percent last year, bringing Southeast Asia’s largest economy back to its pre-pandemic trajectory of about 5 percent annual growth. That was also the fastest pace since 2013, data yesterday showed.
The “impressive” pace of growth last year was largely supported by domestic consumption, as Indonesia saw a rebound in mobility and tourism, Indonesian Central Statistics Bureau head Margo Yuwono said in a briefing yesterday.
Photo: REUTERS
This was bolstered by exports, as the global commodity rally lifted prices of key shipments such as coal, palm oil, iron and steel, he said.
Although the official forecast is for growth of 4.5 percent to 5.3 percent this year, mounting global risks mean the actual performance could be toward the midpoint, if not lower.
Economists in a Bloomberg survey predict this year’s growth to slow below the psychological 5 percent level to 4.9 percent.
Slowdown in some advanced economies is a key risk. Although the IMF last month raised its forecast for the global economy for the first time in a year, growth in advanced nations is expected to remain weak, damping trade in emerging markets, especially Asia.
Indonesia, the world’s largest exporter of palm oil, saw exports growth tapering in the final months of last year.
That suggests the economy is unlikely to see a repeat of last year’s commodity windfall, which helped lift full-year exports to a record.
“Globally, high prices of Indonesia’s main export commodities supported trade performance last year,” Yuwono said. “However, global commodity prices are already in downward trend, hence will impact growth going forward.”
That is in line with the Indonesian Ministry of Finance’s outlook that weakening global economic activity and higher interest rates could weigh on the nation this year.
The warning signs were apparent in the fourth-quarter figures, with GDP growth at its slowest pace in more than a year.
While exports expanded 15 percent year-on-year, it was softer than the 19.4 percent jump in the July to September period. Consumption growth saw a similar softening to 4.5 percent from 5.4 percent.
Moderating growth means Bank Indonesia, which has increased borrowing costs by 225 basis points since August last year, could be on the verge of its last interest rate increase when it meets later this month.
Bank Indonesia Governor Perry Warjiyo last month indicated that risks from a slowing global economy likely outweigh challenges from inflation, as the central bank slowed the pace of its rate move to a quarter-point.
Headline inflation, which was above the central bank’s 2 percent to 4 percent target for most of last year and likely weighed on consumption, is already showing signs of cooling as gains eased to 5.28 percent last month.
The domestic unit of the Chinese-owned, Dutch-headquartered chipmaker Nexperia BV will soon be able to produce semiconductors locally within China, according to two company sources. Nexperia is at the center of a global tug-of-war over critical semiconductor technology, with a Dutch court in February ordering a probe into alleged mismanagement at the company. The geopolitical tussle has disrupted supply chains, with some carmakers reportedly forced to cut production due to chip shortages. Local production would allow Nexperia’s domestic arm, Nexperia Semiconductors (China) Ltd (安世半導體中國), to bypass restrictions in place since October on the supply of silicon wafers — etched with tiny components to
Singapore-based ride-hailing and delivery giant Grab Holdings Ltd has applied for regulatory approval to acquire the Taiwan operations of Germany-based Delivery Hero SE's Foodpanda in a deal valued at about US$600 million. Grab submitted the filing to the Fair Trade Commission on Friday last week, with the transaction subject to regulatory review and approval, the company said in a statement yesterday. Its independent governance structure would help foster a healthy and competitive market in Taiwan if the deal is approved, Grab said. Grab, which is listed on the NASDAQ, said in the filing that US-based Uber Technologies Inc holds about 13 percent of
Taiwan is open to joining a global liquefied natural gas (LNG) program if one is created, but on the condition that countries provide delivery even in a scenario where there is a conflict with China, an energy department official said yesterday. While Taiwan’s priority is to have enough LNG at home, the nation is open to exploring potential strategic reserves in other countries such as Japan or South Korea, Energy Administration Deputy Director-General Chen Chung-hsien (陳崇憲) said. While the LNG market does not have a global reserve for emergencies like that of oil, the concept has been raised a few times —
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday received government approval to deploy its advanced 3-nanometer (3nm) process at its second fab currently under construction in Japan, the Ministry of Economic Affairs said in a news release. The ministry green-lit the plan for the facility in Kumamoto, which is scheduled to start installing equipment and come online in 2028 with a monthly production capacity of 15,000 12-inch wafers, the ministry said. The Department of Investment Review in June 2024 authorized a US$5.26 billion investment for the facility, slated to manufacture 6- to 12nm chips, significantly less advanced than 3nm process. At a meeting with
RSS