RI’s Economic Growth Will Continue Until the End of the Year

Jakarta – The Central Statistics Agency announced that Indonesia’s economic growth in the second quarter of 2022 was 5.44% year on year (yoy). This growth is estimated to continue in the third and fourth quarters so that Indonesia can achieve the 5.2% growth target in 2022.

Economist of the Institute for Development of Economics and Finance (Indef) Nailul Huda revealed that the fairly good economic growth in the second quarter was mainly due to public consumption. In the second quarter, there were several moments that triggered an increase in public consumption.

“If we look thoroughly what actually increased quite highly was public consumption. This increased about 5.51%. So the second quarter is greatly helped by public consumption. There are moments of Ramadan, Eid, as well as the preparation of new school academic year. Therefore if we look at the growth in public consumption, it has risen very sharply,” he said in Jakarta, Saturday, August 6, 2022.

According to him, public consumption contributes 50% of GDP. This is the main factor for economic growth to reach 5.44% in the second quarter. However, Huda predicts that Indonesia’s economic growth in the third quarter will not be as impressive as the second quarter. This actually happened for there is no moment to encourage public consumption.

“In the third quarter there is no moment to grow faster. Therefore we will see that economic growth will slow down in the third quarter,” he continued.

In the fourth quarter, economic growth can be increased again. With a note, inflation can be suppressed as low as possible. According to him, the increase in domestic commodity prices will trigger inflation because it suppresses people’s purchasing power. “Even if inflation is too high, economic growth could be below 5%,” he said.

Huda stated that there are several factors that maintain Indonesia’s economic growth, such as public consumption, investment, and exports. Of the three factors, public consumption is the most important. Therefore, the government is expected to be able to suppress inflation so that it is not too high so that people’s purchasing power is maintained.

“How to? Surely it must maintain inflation in various ways, for example stabilizing food prices, if the government wants to increase the price of pertalite fuel and 3 kilograms of LPG, it must definitely maintain people’s purchasing power with subsidies, for example,” he explained.

Huda also emphasized that the government consumption should also be increased in the third quarter. Although small, government consumption can also help boost economic growth. “Maybe the third quarter can be used. Because even though it is a small portion of GDP, it will be very helpful,” he concluded.

Previously, Coordinating Minister for Economic Affairs Airlangga Hartarto said there were several factors driving the growth of the Indonesian economy. “There are three factors that support the pace of the Indonesian economy to remain positive. Namely, exports, the domestic economy and investment,” said Coordinating Minister Airlangga in Jakarta, yesterday.

The outlook for the third quarter is predicted to remain positive in terms of PMI, Consumer Confidence Index, and the trade balance. “Relatively all are in good condition, as well as external forces, namely the amount of foreign exchange that is still held,” explained Airlangga.

The chairman of Golkar Party also said that in the next few months Indonesia could still enjoy the boom in commodity prices. Then in the third and fourth quarters the government will boost government spending. “The government still has reserves for government spending, which we can encourage and transfer in the second quarter of yesterday to the third and fourth quarters, because usually in the first and second quarters absorption is relatively low,” said Airlangga. (*)