Indonesia’s GDP growth on track amid mounting global uncertainty

INDONESIA’S economy grew more than 5% last quarter, thanks to robust trade and domestic demand.

GDP grew 5.44% in the three months to June from a year ago, the statistics bureau said in Jakarta on Friday. That is faster than the median estimate of 32 economists in a Bloomberg survey for a 5.17% gain. Compared to the previous quarter, GDP expanded 3.72%, beating consensus for a 3.47% rise.

South-East Asia’s largest economy is steadily gaining momentum after a broader reopening and booming exports. That could give the central bank, which has kept borrowing costs at pandemic-era lows, more scope to focus on fighting inflation that’s now at a seven-year high.

While the government has been fending off price pressures through subsidies to cushion the impact of higher energy costs, data shows underlying inflation is inching higher. The core inflation measure tracked by Bank Indonesia quickened 2.86% in July, closer to the midpoint of the central bank’s 2%-4% target range.

Still, policymakers may tread with caution due to global recession risks sparked by an aggressive monetary tightening in the US and stumbling growth in China. Bank Indonesia recently projected that GDP growth could tilt below the midpoint of its 4.5%-5.3% target range this year amid uncertainty to the global outlook. — Bloomberg