Last year, Indonesia's economic growth reached its highest level in nine years because to increased spending brought on by the easing of pandemic restrictions and record-high exports driven by a surge in global commodities.
Following the Russia-Ukraine war, high global commodity prices benefited Southeast Asia's largest economy, helping the rupiah and boosting the nation's current account.
However, the pace of expansion slowed in the final quarter as prices leveled down, and this year's activity may be hindered by lower global demand, high inflation, and an increase in interest rates.
According to figures released by Statistics Indonesia on Monday, the GDP grew by 5.31% in 2022, which was faster than the 5.29% growth rate predicted in a Reuters poll and the strongest year growth rate since 2013.
In contrast to the poll's expected rise of 4.84% and the 5.72% growth in the three months prior, the gross domestic product increased by 5.01% on an annual basis in the fourth quarter.
Over half of Indonesia's GDP comes from household consumption, which increased last year, mainly helped by travel-related spending as Covid-19 restrictions loosened.
Following a decline in daily instances and an increase in vaccination rates that increased family consumption, Indonesia relaxed the majority of its movement restrictions last year. At the year's end, the last of the remaining restrictions was abolished.
According to the statistics office, investment increased by 3.87% last year, which is similar to the growth in 2021 but has not yet reached pre-pandemic levels.
Following the start of the Russia-Ukraine war in February, exports increased as a result of skyrocketing commodity prices. A significant source of nickel steel, palm oil, and thermal coal is Indonesia. Last year, the nation's exports surpassed a record high of $292 billion.
In the meantime, government spending declined in 2022 as Jakarta began to reduce its reliance on health and social spending from the pandemic era.
Government officials have predicted a worldwide economic slump that would result in a further decline in commodity prices and a slowdown in Indonesia's exports, saying that economic activity may stall this year.
Source: CNBC.com
