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Finance minister forecasts Indonesia's Q1 2024 economic growth at 5.17 percent

Jakarta Globe - April 26, 2024

Arnoldus Kristianus, Jakarta – Finance Minister Sri Mulyani Indrawati predicts Indonesia's economic growth in the first quarter of 2024 will reach 5.17 percent, driven by strong household consumption. However, this growth is still constrained by the performance of exports and imports, which often face contractions due to the impact of global economic turmoil.

"Supported by strong performance from consumers, manufacturing, as well as foreign direct investment (FDI) and the purchasing managers index (PMI), we predict our growth for Q1 2024 to be at 5.17 percent. However, we remain cautious about the turbulence occurring in the global economy," said Sri Mulyani during a press conference at her office on Friday.

Government consumption is expected to grow strongly in the first quarter driven by election spending, salary increases for civil servants, and the distribution of holiday bonuses (THR) in the first quarter. Household consumption also increased significantly in line with election activities, THR spending, and controlled inflation.

The Consumer Confidence Index (CCI) in March 2024 was recorded at 123.8, indicating continued consumption growth.

While electricity consumption for businesses remains positive, there was a contraction in the industrial sector. Sri Mulyani attributed this contraction to the numerous public holidays before Eid al-Fitr. Cement consumption, which surged two months ago, corrected to 1.9 percent growth in March.

"Overall, consumer spending is quite good, but we need to remain cautious because some sectors experienced corrections, both seasonal, such as Ramadan and Eid, and structural long-term corrections," said Sri Mulyani.

Investment is expected to increase alongside the progress of national strategic projects (PSN) and the development of the new capital city, Nusantara Capital (IKN). Meanwhile, export and import activities are still hindered by weak global demand.

Indonesia's trade balance recorded a surplus of $4.47 billion (Rp 72.45 trillion) in March 2024, up from $3.64 billion in February 2024. This marked a significant increase from March 2023, which stood at $1.65 billion. March 2024 exports reached $22.43 billion, marking a 16.4 percent increase from February 2024, but a 4.19 percent contraction compared to March 2023. Meanwhile, imports in March 2024 totaled $17.96 billion, reflecting a 2.6 percent decrease from February 2024 and a 12.76 percent decrease from February 2023.

Sri Mulyani stated that projections for economic growth in Q1 2024 from various institutions vary considerably, with Bloomberg at 5 percent, BCA at 5.1 percent, Goldman Sachs at 4.9 percent, Moody's at 4.7 percent, and Nomura at 5.3 percent.

"So, we still have three quarters ahead that we need to observe. Next year is relatively steady, although the variations are not too significant," said Sri Mulyani.

President Joko "Jokowi" Widodo has set a target of 5.2 percent economic growth in 2024, surpassing the 5.05 percent growth achieved in 2023.

In contrast, the International Monetary Fund (IMF) projects Indonesia's growth rate to reach 5 percent for both the present and upcoming years. Meanwhile, the World Bank forecasts a slight decline in growth for 2024 and 2025, with rates anticipated to settle at 4.9 percent annually.

Source: https://jakartaglobe.id/business/finance-minister-forecasts-indonesias-q1-2024-economic-growth-at-517-percen