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MACROECONOMIC ANALYSIS SERIES: Indonesia Economic Outlook Q2-2024 - The Illusion of Stable Growth

Author

Listed:
  • Jahen F. Rezki

    (Institute for Economic and Social Research, Faculty of Economics and Business, Universitas Indonesia (LPEM FEB UI))

  • Teuku Riefky

    (Institute for Economic and Social Research, Faculty of Economics and Business, Universitas Indonesia (LPEM FEB UI))

  • Faradina Alifia Maizar

    (Institute for Economic and Social Research, Faculty of Economics and Business, Universitas Indonesia (LPEM FEB UI))

  • Tarisha Yuliana

    (Institute for Economic and Social Research, Faculty of Economics and Business, Universitas Indonesia (LPEM FEB UI))

  • Muhammad Adriansyah

    (Institute for Economic and Social Research, Faculty of Economics and Business, Universitas Indonesia (LPEM FEB UI))

Abstract

Indonesia's economic growth rebounded to 5.04% (yoy) in the fourth quarter of 2023, following a slowdown to 4.94% (yoy) in the previous quarter. This rebound brought the overall growth for 2023 to 5.05% (yoy), surpassing the 5% threshold. However, there are concerning signs, as the three largest sectors, agriculture, manufacturing, and trade, which cumulatively accounted for over 40% of the economy, showed signs of deceleration in the fourth quarter of 2023. Smaller sectors like transportation, mining, and electricity grew substantially, offsetting some of the decline from the major sectors. External factors, such as geopolitical tensions, China's economic slowdown, and El Niño's impact on agricultural productivity played a role in the challenges faced by Indonesia's economy. Additionally, domestic issues like structural productivity declines in agriculture, weakening purchasing power in the wholesale and retail trade sector, and the continued sluggishness of manufacturing raised concerns. Despite these challenges, the rebound indicates resilience, but it also serves as a call to action for Indonesia to accelerate structural transformation and improve overall productivity.

Suggested Citation

  • Jahen F. Rezki & Teuku Riefky & Faradina Alifia Maizar & Tarisha Yuliana & Muhammad Adriansyah, 2024. "MACROECONOMIC ANALYSIS SERIES: Indonesia Economic Outlook Q2-2024 - The Illusion of Stable Growth," LPEM FEBUI Quarterly Economic Outlook 202402, LPEM, Faculty of Economics and Business, University of Indonesia, revised Feb 2024.
    • Handle: RePEc:lpe:queout:202402
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