No. 26/23/DKom
Economic growth in Indonesia remains solid despite global economic moderation. Data released by BPS-Statistics Indonesia shows that economic growth accelerated to 5.04% (yoy) in the fourth quarter of 2023 from 4.94% (yoy) in the previous period. Overall, therefore, robust economic growth was recorded in 2023 at 5.05% (yoy). In 2024, Bank Indonesia projects higher economic growth in the 4.7-5.5% range, bolstered by domestic demand, particularly consumption ahead of the upcoming general election, and increasing investment, specifically building investment given the ongoing national strategic projects (PSN), including the new capital city (IKN) development. Meanwhile, subdued export performance is projected as a corollary of global economic moderation and lower international commodity prices. Bank Indonesia will continue strengthening macroprudential policy synergy with government fiscal stimuli to nurture economic growth, particularly on the domestic demand side.
Stronger economic growth in the fourth quarter of 2023 was supported by nearly all components of GDP. Household consumption grew 4.47% (yoy) in response to greater mobility during the recent Christmas and New Year festive period, stable public purchasing power and growing consumer confidence. Consumption by non-profit institutions serving households (NPISH) recorded strong 18.11% (yoy) growth as activity ramps up ahead of the general election. Government consumption also increased, growing 2.81% (yoy) on the back of procurement and personnel expenditures. Investment expanded 5.02% (yoy), primarily driven by building investment due to ongoing infrastructure development and capital investment. Meanwhile, exports increased 1.64% (yoy) on positive demand growth from Indonesia's main trading partners despite lower commodity prices of key exports, coupled with improving services exports given the influx of inbound international travellers.
Stronger economic growth was also reflected regionally and in terms of sectoral performance. All sectors in the fourth quarter of 2023 performed positively, with high growth recorded by mobility-related sectors, particularly transportation and logistics, accommodation and food service activities as well as wholesale and retail trade. As the main contributor to growth, the manufacturing industry also expanded on strong domestic and global demand. Spatially, economic growth accelerated in most regions of Indonesia in the fourth quarter of 2023 compared with conditions in the previous period, led by Sulawesi-Maluku-Papua (Sulampua), followed by Kalimantan, Java, Bali-Nusa Tenggara (Balinusra), and Sumatra.
Jakarta, 5th February 2024
Communication Department
Erwin Haryono
Assistant Governor
