Indonesia Posts 5.11% Economic Growth in Q1 of 2024

Minister of Finance Sri Mulyani at Podkabs (Cabinet Secretariat’s Podcast) (Photo by: Public Relations of Cabinet Secretariat/Agung)

Indonesia’s economy continues to grow massively despite global economic stagnation and financial market turmoil, Minister of Finance Sri Mulyani Indrawati said.

“The growth quality also increased significantly due to the growing number of job creation, which has reduced unemployment rate to below pre-pandemic levels,” Minister of Finance said as quoted from the Ministry’s official website, Wednesday (05/08).

Quoting data from BPS – Statistics Indonesia, the country’s economy in the first quarter of 2024 grew by 5.11 percent (year on year/yoy), supported mostly by strong domestic demand and state budget support and the growth had a positive impact on reducing the unemployment rate.

On the expenditure side, household consumption and non-profit institutions serving households grew by 4.9 percent and 24.3 percent (yoy) due to controlled inflation, increased economic activity during the month of Ramadan, pay rise for state civil apparatus, Eid allowances, and activities related to the 2024 General Elections.

Government consumption expenditure grew by 19.9 percent (yoy), and largely supported by the cost of salaries and bonuses for state civil apparatus in the first quarter of 2024. Goods spending and social spending also increased significantly, contributing 1.1 percent to economic growth in the first quarter of 2024 whereas growth in gross fixed capital formation/investment was recorded at 3.8 percent (yoy). Private sector investment performance also grew by 22.1 percent (yoy) with a balanced investment distribution between Java and outside Java islands.

Despite the fact that Indonesia’s export and import growth was influenced by the global economic slowdown, from production side, leading sectors such as manufacturing and trade continue to grow. However, the agricultural sector recorded a contraction of 3.5 percent (yoy) due to the influence of the season.

Increasing community mobility also supported the growth of tourism-supporting sectors, such as the transportation and accommodation sectors, which grew by 8.7 percent (yoy) and 9.4 percent (yoy).

For the record, positive growth trend also emerged in all regions across the country. As the main contributor to the economy, Java island’s economy grew by 4.8 percent (yoy), while Sulawesi and Maluku-Papua islands grew by 6.4 percent and 12.2 percent (yoy), followed by Kalimantan island at 6.2 percent (yoy).

Nevertheless, several global risks must be faced, including the Fed’s policy that is still uncertain, escalation of geopolitical tensions, and global supply chain disruption that has not yet fully recovered. To anticipate these global dynamics, synergy and coordination with other authorities, especially the monetary authority and financial sector, will be further maintained so that the national economy remains stable.

The Government will also continue to monitor and assess potential impacts of global dynamics to domestic economy and fiscal condition. The State Budget will be optimally used as shock absorber to maintain people’s purchasing power and economic growth momentum. (PR of Ministry of Finance/UN) (GWH/MMB)