Indonesia’s economic outlook amid the challenges of 2023 and growth forecast for 2024

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Foodcom Experts
05.02.2024
Indonesia’s economic outlook amid the challenges of 2023 and growth forecast for 2024
Summary
Table of contents
  • Indonesia’s GDP grew by 5.05%, affected by falling commodity prices and a tight monetary policy.
  • Decreased export values and central bank rate hikes slowed domestic consumption.
  • Government predicts 5.2% growth, with optimism from upcoming elections and major investments, despite some economists expecting stable or lower growth.

Indonesia’s GDP grows by 5.05% in 2023, influenced by commodity prices and monetary policy

Indonesia’s GDP growth in 2023 amounted to 5.05%, slightly lower than in 2022 but close to the government’s forecast of 5%. This slowdown was attributed to falling commodity prices, which impacted exports, and tight monetary policy, which affected domestic demand. Key commodities such as palm oil, coal and nickel recorded price declines. The central bank’s interest rate hikes, which amounted to a total of 250 basis points from August 2022 to October 2023, also contributed to the slowdown in domestic consumption.

Indonesia 2024 – Optimistic growth prospects despite export and investment hurdles

Despite these challenges, the government expects a growth rate of 5.2% in 2024 as the parliamentary elections in February are expected to boost GDP. However, some economists predict a stable or slightly lower growth rate due to ongoing challenges in trade and domestic consumption. Investment grew faster in 2023 than in 2022, driven by government projects such as the new capital on Borneo and infrastructure developments. However, export growth slowed significantly, with a sharp decline in shipment value. In Q4 2023, the economy grew by 5.04% year-on-year, in line with forecasts and an improvement on the previous quarter.

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