DEPOK (eNBe Indonesia) - The national economy expanded by 3.51% year on year (y/y) in the third quarter (Q3) of 2021, easing sharply from a 7.07% growth in the previous quarter due to stricter restrictions imposed to curb the spread of the coronavirus Delta variant.
Household consumption expanded 1.03% in Q3, less than 5.96% in Q2, and fixed investment grew 3.74%, lower than 7.54% in the previous quarter.
External demand contributed positively to the GDP, with exports rising by 29.16%, also less than 31.98% growth in Q2.
Imports grew by 30.11%, weaker than 31.22% in Q2. At the same time, government spending grew much less (0.66% vs. 8.03%).
Also, for quarter on quarter (q/q), the national economy advanced 1.55% in Q3 of 2021, moderating sharply from a 3.31% expansion in Q2. Household consumption shrank -0.18%, compared to 1.28% growth in Q2), amid strict COVID-19 containment measures from July to late August.
While government spending growth eased sharply to 8.96% from 28.74% in Q2, external demand contributed positively, as exports rose faster at 9.28%, compared to 6.68% in Q2) while imports fell 1.24%, compared to 6.30% growth in Q2. Meanwhile, fixed investment grew 4.63% after falling 2.69% previously.
Coordinating Minister for Economic Affairs, Airlangga Hartarto, said the positive economic growth in Q3 this year reflects the regained momentum of the economy’s recovery and the recovery of public trust.
The refocusing of the budget (economic recovery program) has boosted public consumption. The controlled situation of the pandemic has prompted the increase of economic activity.
The higher global commodities prices also boosted the country’s external trade. Export grew 29.16% y/y in Q3 of 2021, and import grew 30.11% y/y. The trend of trade surplus continued for the past 17 months consecutively.
The processing industry contributed 3.68% y/y growth to the GDP in Q3 of 2021, followed by trade (5.16%) and mining (7.78%). The health services sector grew the highest, at 14.06% y/y in Q3 this year. The information and communication sector also improved further.
Otherwise, the transportation & warehouse, accommodation, and food & beverage contracted in Q3 due to tighter policy implementation to restrict public activity and movement (PPKM).
The recovery of some business sectors has boosted the absorption of the workforce. In August 2021, the participation of the workforce increased to 67.80%, while open unemployment declined to 6.49%.
By spatial, Java and Sumatra continued growing in Q3 of 2021, at 3.03% y/y and 3.78% y/y, respectively. Also, Kalimantan, Sulawesi, Maluku, and Papua grew further, while Bali and Nusa Tenggara contracted 0.09% y/y as the tourism sector has not recovered yet.
Overall, the national economy is expected to grow by above 5% in the fourth quarter (Q4) of 2021, in line with the improving business sector activity as reflected in the growth of the manufacturing sector.
Airlangga is optimistic that the economy will grow by 6% in Q4 this year. For 2021 the full year of 2021, the government maintained its economic growth forecast at 4%.
Per October 2021, Indonesia’s official reserve assets remained high at US$145.5 billion, despite being lower than US$146.9 billion as of end-September 2021.
The position of official reserve assets was equivalent to finance 8.5 months of imports or 8.3 months of imports and servicing government’s external debt, and well above the international adequacy standard of three months imports.
Meanwhile, the latest consumer survey conducted by the central bank (Bank Indonesia/BI) revealed how consumer confidence continued to grow in October 2021 in response to greater public mobility after the Government relaxed restrictions.
Consumer optimism in October 2021 was stoked by consumer perception of current economic conditions and expectations of economic conditions moving forward.
Consumer perception of current economic conditions improved particularly in terms of job availability and income, in line with increasing public mobility after the authorities relaxed public activity restrictions amidst the improved response to the COVID-19 handling.
Consumer expectation of economic conditions moving forward is indicated to be improving and continue to be in the optimistic area, boosted by future expectations of income, job availability, and business activity.***
