Deni Ghifari, Jakarta – National economic growth remained above the 5 percent mark in the third quarter, thanks to strong growth in exports.

Statistics Indonesia (BPS) official Edy Mahmud revealed in a press conference in Jakarta on Wednesday that gross domestic product (GDP) growth slowed to 5.04 percent year-on-year (yoy) from 5.12 percent yoy registered in the preceding quarter, but that is slightly higher than a year ago.

"This growth is higher than the third quarter of 2024, which grew at 4.95 percent [yoy]," said Edy.

Edy said the average figure for the first three quarters amounted to 5.01 percent, which leaves quite a gap to meet the government's full-year target of 5.2 percent.

The Finance Ministry's Economy and Fiscal Strategy Directorate General had projected last month that the third-quarter growth rate would hover around 5.1 percent.

However, Finance Minister Purbaya Yudhi Sadewa cautioned, also in October, that it might be lower because of the weeklong protests unfolding in late August, which temporarily disrupted many economic activities and introduced a new source of uncertainty.

Purbaya maintained that economic growth would touch 5.5 percent yoy in the final quarter of this year.

Output in the manufacturing sector grew at a rate of 5.54 percent yoy, the BPS data showed, and made up more than 19 percent of GDP, followed by agriculture, which grew by 4.93 percent yoy, and trade with a 5.49 percent yoy increase.

Looking at the data from the expenditure side, household spending was up 4.89 percent yoy, which marks a slight slowdown from 4.97 percent yoy growth recorded in the second quarter.

Consumption continues to account for more than half of the country's overall GDP, but the share has declined to 53.14 percent in the third quarter from 54.25 percent and 54.53 percent in the second and first quarter, respectively.

Coordinating Economy Minister Airlangga Hartarto acknowledged on Wednesday a "weakening" of consumption in the third quarter but argued it would go up in the last quarter, as he walked to meet President Prabowo Subianto at the State Palace to talk about the state of the economy.

The minister had planned a press conference on the GDP performance in his office for Wednesday but subsequently cancelled it as the schedule clashed with the previously unplanned meeting with Prabowo.

Exports, meanwhile, grew by a steep 9.91 percent yoy, even though that marks a decline from 10.67 percent yoy export growth seen in the preceding quarter.

Permata Bank economist Faisal Rachman wrote in an analysis on Wednesday that "the moderation [in export growth] was largely attributed to normalization" following so-called front-loading as traders sought to ship goods ahead of higher United States import tariffs to be imposed on products from Indonesia.

Imports only grew by 1.18 percent yoy in the third quarter, significantly slower than the 11.65 percent rate recorded in the second quarter.

The weakening of imports was indicative of "softer investment growth", said Faisal, referring to gross fixed capital formation (GFCF).

GFCF, which reflects investment in fixed assets like buildings, machinery and equipment and as such is an indicator of capacity growth, grew at a milder pace of 5.04 percent yoy, compared with 6.99 percent in the second quarter.

Faisal argued that the overall moderation economic growth reflected "seasonal normalization", given that economic activity in the second quarter had benefitted from religious festivities that generally lead to a spike in consumer spending.

"We see that Indonesia's GDP growth prospects still continue to face headwinds, underscoring the importance of maintaining an expansionary economic policy stance, particularly through accelerated government spending, especially to [support] productive sectors with high multiplier effects," said Faisal.

Andalas University economist Syafruddin Karimi said on Wednesday that "Indonesia's economic growth had started to lose steam". While exports were indeed climbing in the quarter, that did not translate well into increased domestic spending power and investment.

"This underlines the fact that the growth engine is working, albeit not with optimal torque," said Syafruddin.

Source: https://asianews.network/indonesias-exports-help-keep-gdp-growth-above-5-in-third-quarter