Encouraging growth
The Indonesian economy posted an encouraging result for Q1 2024 growth, at 5.11%, slightly above the 5.04% annual growth in Q4 2023. On a quarterly basis, the economy contracted by 0.83%, which followed the regular cycle. The fastest sector of growth in Q1 2024 was public administration and defense, at 18.88% Y/Y, followed by human health and social work activities, which grew by 11.64%.
By region, once again Eastern Indonesia achieved a high rate of growth in Q1 2024. Several provinces in the eastern part of Indonesia have consistently grown at a faster rate than other provinces.
The improvement of the economy was accompanied by a deficit of the current account for that quarter, larger than in the previous quarter. While in Q4 2023, the Indonesian current account reported a deficit of $1,120 million or 0.33% of GDP, in Q1 2024 the current account reported a larger deficit of $2,161 million or 0.64% of GDP. At the same time, the financial and capital account in the balance of payments in Q1 2024 recorded a large deficit of $2,305 million. The deficit in the current account combined with a deficit in the financial account led the overall balance of payments to a deficit of approximately $5,970 million. The large deficit of the balance of payments led foreign exchange reserves to decline to $140,390 million.
The Central Board of Statistics also released its balance of trade data for April 2024. Exports decreased by 12.97% M/M and reached $19,615 million in April, with non-oil exports down by 14.06% to $18,265.1 million. At the same time, imports also fell, by 10.6%, to reach $16,056.5 million, resulting in a trade surplus of $3,558.5 million, another large surplus, but smaller than the previous month.
The Central Board of Statistics also released the inflation report, which showed that inflation slowed slightly. In April, inflation was reported at 0.25% M/M. With that performance, Y/Y inflation stood at the level of of 3.00%, a level of inflation slightly below the previous month but still in the upper part of the target corridor of the Central Bank. Based on that background, Bank Indonesia decided to keep the interest rate constant at its policy meeting in May 2024.
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