Indonesia’s Economy Grows 4.95% in Q3-2024 Amid Global Challenges

Jakarta, INTI  - Amidst significant global uncertainty and ongoing geopolitical tensions, Indonesia’s economy recorded a 4.95% year-on-year growth in Q3-2024. This growth, equating to 1.5% quarter-on-quarter (qtq) and 5.03% on a cumulative year-to-date basis (ctc), stands as a testament to Indonesia’s economic resilience in navigating global economic fragmentation and moderate global economic growth projected at 3.2% for both 2024 and 2025.

“Historically, the third quarter tends to show a slight decline compared to previous quarters. We hope the fourth quarter will see improvement. Quarter-on-quarter, we still observe a growth of 1.5%. Comparing the three quarters from the beginning of the year to Q3, we’re growing at 5.03%. This means we can still expect to maintain our economic performance by year-end, remaining around 5% as anticipated in our state budget,” said Coordinating Minister for Economic Affairs Airlangga Hartarto during a press conference on Q3-2024 Economic Growth at the Ministry of Economic Affairs office on Tuesday (5/11).

As with most quarterly cycles, the third quarter’s economic growth tends to decline compared to the previous quarter, particularly in the absence of major religious holidays or school vacations, unlike Q2.

The economic growth in Q3-2024 was supported by low, controlled inflation within the target range of 2.5% ±1%, reaching 1.71% in October 2024. Public debt was also controlled, standing at 39.4% as of June 2024. Indonesia’s economic performance remained solid, outperforming other developed and emerging economies such as Singapore (4.1%), Saudi Arabia (2.8%), and Mexico (1.5%).

Every expenditure component recorded positive growth. Household consumption grew by 4.91%, contributing the highest to growth at 2.55%, driven by an increase in the hospitality and restaurant sectors. Meanwhile, Gross Fixed Capital Formation (GFCF) grew by 5.15%, spurred by both public and private sector investments, particularly in infrastructure development.

All industrial sectors saw positive growth, with the top five sectors contributing 64.94% to the GDP. The Transportation and Warehousing sector recorded the highest growth at 8.64%, in line with increased passenger numbers and goods shipments. The Food and Beverage sector also saw a boost, growing by 8.33% due to the surge in international tourist arrivals, MICE events, and international events like the Mandalika MotoGP and PON XXI.

Regionally, economic growth was experienced nationwide, though some areas, such as Sumatra, Sulawesi, and Maluku-Papua, showed slower growth. Java, Kalimantan, Bali, and the Nusa Tenggara regions demonstrated stronger growth compared to other regions.

“The quality of Indonesia’s economic growth is also improving. The working population has increased by 4.79 million, reaching 144.64 million compared to August 2023. Meanwhile, unemployment fell by 390,000, leaving 7.47 million unemployed,” Airlangga added.

The proportion of formal workers rose to 42.05%, an increase from 40.89% in August 2023, driven mainly by a rise in employees with employee status, which grew by 3.44% (yoy).

Airlangga further outlined the government’s policy strategy to accelerate growth in Q4-2024. First, maintaining purchasing power by extending fiscal incentives for VAT DTP and PPnBM DTP for property and automotive sectors, increasing the FLPP quota, utilizing JKP, promoting JKK funds, and fostering entrepreneurship through KUR. Secondly, increasing the added value of natural resources by intensifying downstream processing on 26 commodities.

“Furthermore, to improve economic competitiveness, various initiatives are underway to promote national strategic projects, develop industrial zones, economic special zones, and provide tax holiday incentives as regulated under Minister of Finance Regulation No. 69 of 2024,” Airlangga concluded.