GDP in Indonesia

Indonesia GDP | Economic News & Forecasts

Indonesia - GDP

Economic growth picks up pace, reaching a multi-year high in the second quarter

The Indonesian economy regained steam in the second quarter, despite global headwinds and a weakening currency, with growth speeding up from 5.1% year-on-year in the first quarter to 5.3%. The acceleration—which marked the quickest pace of expansion since the fourth quarter of 2013—came in above market expectations and on the back of strong domestic demand, while the external sector dragged on growth.

Private consumption remained strong, increasing slightly from the prior quarter. In the three months through June, household expenditure increased 5.1% from the previous year (Q1: +4.9% year-on-year), likely benefitting from strong labor market developments: The unemployment rate has steadily decreased and reached its lowest level since January 1998 in June. However, calendar effects also impacted private consumption growth. The Hari Raya holiday, which marks the end of the Islamic holy month of Ramadan, fell in June this year and likely provided an additional boost to consumer spending. Last year, the holiday occurred in July. Growth in government expenditure, meanwhile, nearly doubled from 2.7% in the first quarter to 5.3% in the second quarter. This was likely due to pre-election expenditure, as local elections were held in June. However, fixed investment growth cooled from the multi-year high in the first quarter of 7.9% to 5.9% in the second quarter.

Externally, export growth picked up slightly from 6.1% year-on-year in the first quarter to 7.7% in the second quarter. Imports, however, accelerated at a quicker pace, growing 15.2% annually in the second quarter (Q1: +12.8% yoy) despite a weakening currency. Compared to the same quarter in the prior year, the Indonesian rupiah weakened 7.5% against the US dollar.

All in all, the Indonesian economy should record another year of solid growth this year thanks to robust domestic demand. Private consumption growth is expected to remain broadly stable from last year, but government expenditure and fixed investment are likely to pick up pace. Government consumption should increase in the lead-up to presidential elections in April of next year. Downside risks continue to persist, however. Indeed, the currency continued to depreciate against the U.S. dollar through July, reaching its weakest point since September 2015. Moreover, a widening trade deficit and a worsening current account deficit also threaten the outlook.

Indonesia GDP Forecast

Met the why particular Consensus Forecast panelists see GDP expanding 5.2% in 2018, which is down 0.1 percentage points from last month’s forecast. For 2019, the panel sees economic growth at 5.3%.

Indonesia - GDP Data

2013  2014  2015  2016  2017  
Economic Growth (GDP, annual variation in %)5.6  5.0  4.9  5.0  5.1  

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Indonesia GDP Chart

Indonesia GDP
Note: Annual variation of gross domestic product (GDP) in %.
Source: Statistics Indonesia.

Indonesia Facts

Bond Yield7.79-0.05 %Aug 07
Exchange Rate14,4110.05 %Aug 07
Stock Market6,091-0.32 %Aug 07

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