Q3-2024 Economic Growth in Indonesia: Key Strategies and Regional Insights

Jakarta, INTI - In Q3-2024, Indonesia’s economy demonstrated robust growth despite facing global economic challenges. Recording a 4.95% year-on-year (yoy) increase, 1.5% quarter-on-quarter (qtq), and 5.03% on a cumulative year-to-date basis (ctc), the Indonesian economy remains on track with the government’s state budget expectations, thanks to strategic policy measures and resilient sectors.

According to Coordinating Minister for Economic Affairs Airlangga Hartarto, while Q3 historically tends to be lower compared to previous quarters, expectations remain high for a stronger Q4-2024. Airlangga expressed optimism during the press conference held on Tuesday (5/11), noting the importance of achieving growth aligned with the 5% target in the state budget.

This quarter’s economic growth, albeit lower than previous quarters, was driven by several factors. Notably, inflation was controlled within the target range of 2.5% ±1%, standing at 1.71% in October 2024. Public debt also remained within a manageable threshold at 39.4% in June 2024. These fiscal indicators underscore Indonesia’s economic resilience, placing it ahead of other emerging and developed economies, including Singapore (4.1%), Saudi Arabia (2.8%), and Mexico (1.5%).

In Q3-2024, all expenditure components showed positive trends. Household consumption, the main contributor to economic growth, increased by 4.91%, boosted by strong performance in the hospitality and restaurant sectors. Additionally, Gross Fixed Capital Formation (GFCF) increased by 5.15%, largely due to increased investments from both government and private sectors, particularly in infrastructure projects.

On the industry side, all major sectors saw growth, with the top five sectors accounting for 64.94% of GDP. The Transportation and Warehousing sector led with an 8.64% growth rate, followed by the Food and Beverage sector, which grew by 8.33%, driven by a rise in international tourist arrivals, MICE events, and other major events such as the Mandalika MotoGP and PON XXI.

Regionally, economic growth occurred in all regions, though some, like Sumatra, Sulawesi, and Maluku-Papua, experienced slower growth. Meanwhile, regions such as Java, Kalimantan, Bali, and Nusa Tenggara displayed stronger growth, reflecting variations in regional economic conditions.

Minister Airlangga highlighted that employment quality has improved along with economic growth. The working population increased by 4.79 million compared to August 2023, reaching a total of 144.64 million. Unemployment also decreased by 390,000 to a total of 7.47 million, with formal employment rising to 42.05%, up from 40.89% in August 2023.

Looking ahead to Q4-2024, Airlangga outlined several policy strategies. These include sustaining purchasing power by extending VAT DTP and PPnBM DTP fiscal incentives for property and automotive sectors, increasing the FLPP quota, utilizing JKP and JKK, and fostering entrepreneurship through KUR. Additionally, the government plans to increase the added value of natural resources by intensifying downstream processing in 26 key commodities.

“In terms of boosting economic competitiveness, we have implemented various initiatives, including promoting national strategic projects, developing industrial zones, economic special zones, and offering tax holidays through Minister of Finance Regulation No. 69 of 2024,” Airlangga concluded.