Indonesia's Gross Domestic Product (GDP) is estimated to grow within the range of 4.97% to 5.01% year-on-year (yoy) in Q2 2024. "GDP is expected to grow 4.97% to 5.01% yoy in Q2 2024 and 5% to 5.1% for the fiscal year 2024, driven by limited seasonal factors and high domestic and global uncertainties," said Teuku Riefky, Economist at the Institute for Economic and Community Research, Faculty of Economics and Business, University of Indonesia (LPEM FEB UI), as quoted by Antara on Sunday, August 4, 2024. He noted that Indonesia's economy generally weakened in Q2 compared to the previous quarter due to the absence of seasonal economic drivers, high global uncertainty, and ongoing structural issues, which negatively impacted GDP growth. Moreover, uncertainty regarding future government policies has led consumers to hold back on spending and investors to adopt a wait-and-see approach.
Riefky also highlighted that domestic policy uncertainty during the government transition period, coupled with global uncertainty related to the US Federal Reserve's actions, triggered capital outflows in the quarter. These factors contributed to the depreciation of the Indonesian rupiah by 6.33% year-to-date (ytd) at the end of June 2024 and possibly slowed GDP growth in Q2 2024. Nonetheless, Indonesia's GDP growth was supported by an improved trade balance, with a surplus of approximately USD 8.04 billion driven by increased global demand and higher commodity prices. This surplus grew by about 2.82% yoy and 8.42% quarter-to-quarter (qoq). Additionally, increased investment realization, particularly Foreign Direct Investment (FDI) which reached IDR 217.3 trillion, growing 6.3% yoy, also boosted GDP growth in Q2 2024. The total realized foreign and domestic investment in Q2 2024 was IDR 428.4 trillion, up 6.7% yoy and 22.5% qoq. "We estimate GDP to grow by 4.99% with a range estimate from 4.97% to 5.01% in Q2 2024 and 5.1% for the fiscal year 2024 with an estimated range of 5% to 5.1%," he concluded.
