Indonesia's economy sees slowest growth in 2 years
Date
11/6/2023 7:10:34 AM
(MENAFN) Indonesia's economic growth in the third quarter was weaker than expected, expanding at a rate of 4.94 percent compared to the previous year. This slower growth was primarily attributed to a decline in exports, driven by softer commodity prices. While the figure fell short of Bloomberg's forecasts, Central Statistics Bureau (BPS) head Amalia Adininggar Widyasanti emphasized that Indonesia's resilience in the face of global economic challenges was noteworthy.
The decline in exports was particularly pronounced, with a 4.26 percent contraction, marking the sharpest drop since the end of 2020. The reduced demand for commodities, such as coal and palm oil, played a significant role in this export decline. Indonesia has experienced a shrinking trend in overseas shipments for six out of the past seven months.
To safeguard the rupiah amid increasing global economic uncertainty, Indonesia unexpectedly raised interest rates by 25 basis points to six percent last month. While the rupiah has performed relatively well against a strengthening US dollar, it has still experienced a decline, reaching its lowest level since April 2020, at 15,800 to the greenback in the previous month.
The devaluation of the currency may lead the government to consider raising fuel prices, as Indonesia imports half of its petroleum. Bhima Yudhistira, an economist from the Center of Economic and Law Studies, highlighted the challenges facing the country's natural resources sector, citing issues related to exploitation and oversupply. While Indonesia has relied heavily on economic consumption, sustaining growth in this context could become increasingly difficult.
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