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Domestic consumption and infrastructure fuel Indonesia's 5.05% GDP growth in 2023

Jakarta Globe - February 5, 2024

Arnoldus Kristianus, Jakarta – The Central Statistics Agency (BPS) has reported that Indonesia's economy expanded by 5.05 percent in 2023. The major contributors to the Gross Domestic Product (GDP) were domestic consumption, accounting for 58.83 percent, and gross fixed capital formation (GFCF) with a 30.57 percent contribution.Amalia Adininggar Widyasanti, currently acting as the Head of BPS, said Indonesia managed to maintain positive economic momentum despite the global economic slowdown. "In the fourth quarter of 2023, Indonesia experienced strong economic growth of 5.04 percent, concluding the year with a robust 5.05 percent economic expansion,' she said at a press conference on Monday.

Amalia said domestic consumption continued to grow due to controlled inflation and the increased purchasing power of consumers in high-growth consumption groups. The growth was evident in the restaurant and hotel sectors, driven by a surge in tourism during school holidays, Christmas, and New Year. Additionally, transportation and communication supported the mobility of people for tourism purposes. Motorcycle purchases also saw an increase which contributed to GDP growth

The positive growth of GFCF was attributed to infrastructure development and increased investment activities in Indonesia. This was supported by housing projects such as the Halim Perdana Kusuma Airport apartment complex, civil servant apartments in the new capital Nusantara, the million houses program, and toll road construction, including Kisaran-Lebing Tinggi, Serpong-Cinere, Cinere-Jagorawi, and Cimanggis-Cibitung toll roads.

Furthermore, activities related to election preparations, and dam construction projects, including Margatiga Dam in Lampung, Cipanas Dam in West Java, and Karian Dam in Banten, contributed to this growth.

Amalia highlighted that all business fields experienced positive growth in 2023. The industries with the largest contributions to the economy were manufacturing (18.67 percent), trade (12.94 percent), agriculture (12.53 percent), mining (10.52 percent), and construction (9.92 percent), continuing the positive growth trend.

The industries with the highest growth were transportation and warehousing (13.96 percent), other services (10.52 percent), and accommodation and food services (10.01 percent).

"This was driven by increased community mobility, international events such as the U-17 World Cup, ASEAN Summit, Mandalika MotoGP, and preparations for general elections," she said.

The International Monetary Fund (IMF) forecasts global economic growth to reach 3.1 percent in 2024 and 3.2 percent in 2025. Meanwhile, Indonesia is expected to achieve a growth rate of 5 percent for the current year and the following year.

In contrast, The World Bank predicts a decrease in growth, falling from 5.3 percent in 2022 to 5 percent in 2023. This downward trend extends to both 2024 and 2025, with the growth rate projected to be 4.9 percent in each of those years.

Source: https://jakartaglobe.id/business/domestic-consumption-and-infrastructure-fuel-indonesias-505-gdp-growth-in-202