BENGALURU, Nov 3 (Reuters) – Indonesia’s economy grew at a faster pace than last year, boosted by exports and consumption, but China’s slowdown and the global recession pose serious risks, a Reuters poll has found.
Southeast Asia’s largest economy has been on the upswing for more than a year due to rising commodity prices. The world’s wealthiest country posted $39.9 billion in remittances in the first nine months of this year, just shy of the $39.7 billion in 2006.
This has helped the country cope with the US Federal Reserve’s interest rate hike more than many of its peers.
The country reported annual economic growth of 5.44% in the second quarter, the strongest reading in a year, and is expected to grow 5.89% last quarter compared to the same period a year ago, the average forecast of 18 economists in the survey showed. . Estimates ranged from 5.23% to 7.50%.
The information should be released on Nov. 7.
“We expect growth to pick up on the back of a slowdown from Q3 2021 and the continued release of domestic demand due to the economic recovery,” said Shivaan Tandon, Asia economist at Capital Economics.
“Exports should also support growth in Q3 although we think foreign demand will turn into a headwind for the region ahead.”
However, on a quarter-on-quarter basis, growth was expected to have slowed to 1.62% from 3.72% in the second quarter. This was based on a small sample of predictions.
A Reuters poll found that GDP is expected to grow 5.2% this year, in line with Bank Indonesia’s forecast, then slightly to 5.0% in 2023.
While rising commodity prices have acted as a buffer, a sharp slowdown in China – Indonesia’s biggest trading partner – could pose a major threat to the export-led economy.
That together with Bank Indonesia’s rate hike campaign, which has intensified over the past few months to reduce inflation and boost the rupiah, is expected to dampen domestic demand.
Bank Indonesia has raised rates by 125 basis points since August.
Devayani Sathyan reports; Voting for Veronica Khongwir and Maneesh Kumar; Edited by Hugh Lawson
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