Despite Expectations, Indonesia’s Household Consumption Continues to Drive Economic Growth in Q1-2023

traditional market in Indonesia (photo: Alex Hudson - Unsplash)

Indonesia’s household consumption continues to be the driving force behind the country’s economic growth in the first quarter of 2023, according to the latest data from the Central Statistics Agency (BPS). The growth rate reached 5.03%, which is slightly higher than market consensus predictions of 4.9% for Q1 2023.

Deputy Head of Balance and Statistical Analysis at BPS, Edy Mahmud, revealed that household consumption rose by 4.54% in Q1 2023, compared to 4.34% in the same period last year.

He explained that the transportation and communication sectors saw the highest growth rates, reflecting increased mobility in the country. The sales of motorcycles and increased passenger traffic for ground, sea, and air transport all contributed to this trend.

Additionally, the BPS also noted a significant increase in restaurant and hotel consumption, as evidenced by the positive growth in hotel occupancy rates during Q1 2023. Edy attributed this growth to the Ramadan season, which traditionally sees an increase in food and beverage consumption.

The strong growth in exports also played a crucial role in Indonesia’s economic growth in Q1 2023. The export of goods and services showed the highest growth rate of 11.68% year-on-year in the first quarter of 2023.

Edy emphasized that household consumption and foreign trade accounted for 2.44% and 2.10%, respectively, of the total contribution to Indonesia’s economic growth in Q1 2023.

The BPS data underscores Indonesia’s resilience amidst the global pandemic, which has severely impacted many countries worldwide. The country’s economic performance demonstrates the strong potential of its domestic market and the success of its export-oriented policies. However, continued efforts to improve infrastructure and increase productivity will be critical to ensure sustained economic growth in the future.