Growing at a comfortable rate
The Indonesian economy posted another encouraging growth result, with Q4 2023 GDP at 5.04%, above the 4.94% annual growth for Q3 2023. Compared to the previous quarter, the Indonesian economy expanded by 0.45%, following the regular cycle. With the rate of growth for Q4 slightly higher than 5%, overall economic growth for full-year 2023 was 5.05%. This rate of growth was lower than that of 2022, which stood at 5.31%.
The fastest sectors of growth in Q4 2023 were transportation and warehousing, which expanded by 10.33%, and "other services", which grew by 10.15%. On the expenditure side, the strongest growth took place in LNPRT consumption, which grew by 18.11%.
By region, once again, Eastern Indonesia grew quickly, by 10.15%, the highest rate of growth in Q4 2023 of all the regions. With that performance, several provinces in the Eastern part of Indonesia have consistently grown more rapidly than all other provinces.
The improvement of the economy in Q4 2023 was accompanied by a small deficit of the current account for the quarter. While in Q3 2023, Indonesia's current account reported a deficit of $1 billion or 0.3% of GDP, in Q4 the current account registered a deficit of $1.3 billion, or 0.4% of GDP. At the same time, the financial and capital account of the balance of payments in Q4 recorded a large surplus of $9.8 billion. The small deficit in the current account combined with the large surplus in the financial account led the overall balance of payments to a large surplus of around $8.6 billion for the final quarter of the year.
For full-year 2023, Indonesia's balance of payments registered a surplus of $6.3 billion, compared with a $4.0 billion surplus in 2022. For 2023, the current account registered a deficit of $1.6 billion or 0.1% of GDP, while the financial and capital account registered a large surplus of $8.7 billion. The large surplus of the balance of payments led foreign exchange reserves to end the year 2023 at $146.4 billion.
The Central Board of Statistics also released the balance of trade data for the month of January 2024. Exports were down by 8.34% M/M and reached $20,524.1 million, with non-oil exports down 8.54% to $19,126.5 million. At the same time, imports fell slightly, by 3.13%, to $18,509.0 million, resulting in a trade surplus of $2,015.1 million. While this is another large surplus, it is significantly below that of the previous month.
The Central Board of Statistics also released the January 2024 inflation report, which showed that inflation has continued to slow significantly. For the month of January, inflation was reported at 0.04%. With that performance, Y/Y inflation stood at 2.57%, a level in the lower part of the target corridor of the Central Bank. Based on that, Bank Indonesia decided to keep the benchmark interest rate constant at 6.00%.
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