Economic Growth 5.44% Above Expectations and Consensus

By Ryan Kiryanto, Economist and Co-Founder/ Expert Council Member of the Institute of Social, Economics and Digital/ ISED

Jakarta – Realization of economic growth or gross domestic product (GDP) in the second quarter of 2022 was recorded at 5.44% year on year or (3.72% quarter to quarter/ qtq) arguably impressive, according to estimates, even exceeding the expectations and consensus of economists that in general set an estimate of the midpoint of 5% only. What is impressive, both in terms of expenditure and business fields, are all moving positively.

This is all as a result of the easing of Enforcement of Community Activities Restrictions policies throughout the country which has encouraged a surge in the mobility of people, goods, and services, especially the situation coincides with the celebration of Eid al-Fitr where the government allows people to go back to their hometown for Eid. As the result, domestic household consumption soared. Consumption of food, drink, and transportation and communication also soared.

Exports which grew by 19.74% are also expected to be sustainable amidst geopolitical tensions in Ukraine and Taiwan. What is also impressive is that the annual GDP growth chart from quarter to quarter continues to improve and is stable, where in quarter III-2021 it was 3.51%, quarter IV-2021 was 5.02%, quarter I-2022 was 5.01%, and quarter II-2022 by 5.44%.

Thus, the direction or pattern of annual growth from quarter to quarter is already heading to conditions prior to the COVID-19 pandemic where annual GDP is always above 5%. However, what needs to be considered is that spatially the formation of GDP is still dominated by Java Island (56.55%) followed by Sumatra 22.03%, then the rest are outside Java and Sumatra.

What should also be a concern is that the economic growth of Java Island, which amounted to 5.66%, exceeded the national economic growth, which means that Indonesia’s GDP in Q2/2022 was indeed supported by the economy of Java Island. This also means that these two islands dominate the contribution of GDP due to the support of the availability of better basic infrastructure.

So that it is necessary to pay attention in the future to regions whose gross regional domestic product (GRDP) is below the national GDP, such as Sumatra (4.95%), Kalimantan (4.25%), and Bali-Nusra (3 94%). In essence, equitable growth must be a going concern of the government, one of which is the development of basic infrastructure widely and evenly to narrow the gap. Thus, future economic growth will be more stable, resilient, and inclusive. (*)