JAKARTA: Indonesia’s economic growth accelerated to a nine-year high in 2022 despite global uncertainty and a final-quarter slowdown, official data showed Monday, owing to soaring commodity prices and easing Covid-19 curbs.
Indonesia was badly affected by the coronavirus pandemic, with its exports and tourism-reliant economy taking a massive hit in 2020 as GDP shrunk by 2.07 percent—its first recession since the 1997 Asian financial crisis.
But Southeast Asia’s largest economy has bounced back since then, posting economic growth last year of 5.31 percent, Statistics Indonesia said Monday, the highest level since 2013.
“The figures show that Indonesia’s economy grew solidly in 2022,” statistics agency head Margo Yuwono said.
He said growth was propelled by high export prices and the lifting of travel restrictions, with dropped quarantine requirements in March spurring business and spiking tourist arrivals.
“The reopening of almost all international airports has boosted people’s economic activity,” Yuwono said.
The country welcomed more than 740,000 visitors in the first half of the year, an increase of more than 900 percent on-year.
The annual rise came despite slowing growth in the final quarter of the year after a strong July-September.
The economy expanded 5.01 percent on-year in October-December, down from 5.72 percent in the previous three months.
But it still maintained its annual rise from pandemic lows after expanding 3.69 percent in 2021 as coronavirus cases started to decline and export prices for key commodities like palm oil, coal and nickel rose significantly.
The country’s economic growth is expected to slow slightly this year despite the recovery, according to economists.
“Further weakness is likely as weak global demand, high inflation and elevated interest rates drag on activity,” said Gareth Leather, senior Asia economist at Capital Economics.
“We expect growth to slow further over the coming quarters.”
Meanwhile, President Joko “Jokowi” Widodo on Monday asked the Financial Services Authority (OJK) to support the government’s policy to downstream the mineral mining industry. He claims that he still hears news about corporations finding it hard to build smelters in Indonesia.
This was mentioned by the President in an OJK event that is touted as the ‘Annual Financial Services Industry Meeting 2023.’
“I still hear complaints from those that want to build smelters that are faced with difficulties in finding funding. They must be supported but with meticulous calculation and caution as this downstream strategy is key for our country to leap forward as a developed nation,” said the President on February 6.
He insisted that Indonesia has struggled as a lower middle-income nation up to 2018 and saw that status improve to an upper middle-income nation the following year in 2019. However, this status was degraded to a lower middle income again due to the pandemic before being elevated once again to a higher middle income in 2022.
This is what we must consistently push because our GDP (Gross Domestic Product) continues to rise. So we really hope we can jump forward. Downstream is the key if we want to become a developed country,” said Jokowi.
He then stressed that the downstream program would be encouraged in all commodities, be it Crude Palm Oil (CPO), mineral, and coal, as well as marine resources which are the focus of the government.
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