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INDONESIA: Solid 2024 With Stronger Domestic & Export Growth

INDONESIA
EM BulletAPACEmerging Market NewsBulletIndonesiaMarketsFixed Income Bullets

Q4 Indonesian GDP was as expected rising 0.5% q/q and 5.0% y/y up from 4.9% in Q3 leaving 2024 up 5% in line with 2023. Bank Indonesia said in January that it expected 2024 growth to be “slightly below the midpoint of the 4.7-5.5% range” and for Q4 to be “slightly” below expectations due to lower domestic demand. It has cut rates 50bp this cycle and continues to support growth with macroprudential policies given its focus on the rupiah which has been weaker. This should continue in 2025 accompanied by more rate cuts.

  • 2024 GDP was below the government’s 5.2% target, while new President Prabowo is aiming for growth to reach 8% during his term and has increased fiscal stimulus plans as a result.
  • BI revised down its 2025 GDP range slightly in January to 4.7-5.5% from 4.8-5.6% because of weak private investment.
  • Domestic demand slowed slightly in Q4 rising 4.9% y/y after 5.0% in Q3 driven by a slowdown in government consumption growth to 4.2% y/y from 4.6% y/y. Private consumption was slightly stronger at 5.0% y/y from 4.9%, the highest since Q3 2023 and in line with growth over the last three years. GFCF grew at 5.0% y/y after 5.1% in Q3.
  • Export growth slowed to 7.6% y/y in Q4 after 9.1% but 2024 saw an improvement to 6.6% from 1.3% the previous year.
  • USDIDR is off its Monday high of 16471 helped by BI intervention and market stabilisation following deals to delay US tariffs on Mexico and Canada. USDIDR is at 16309, which is slightly lower than January 15, the last BI decision, which should reassure BI.

Indonesia growth y/y%

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Q4 Indonesian GDP was as expected rising 0.5% q/q and 5.0% y/y up from 4.9% in Q3 leaving 2024 up 5% in line with 2023. Bank Indonesia said in January that it expected 2024 growth to be “slightly below the midpoint of the 4.7-5.5% range” and for Q4 to be “slightly” below expectations due to lower domestic demand. It has cut rates 50bp this cycle and continues to support growth with macroprudential policies given its focus on the rupiah which has been weaker. This should continue in 2025 accompanied by more rate cuts.

  • 2024 GDP was below the government’s 5.2% target, while new President Prabowo is aiming for growth to reach 8% during his term and has increased fiscal stimulus plans as a result.
  • BI revised down its 2025 GDP range slightly in January to 4.7-5.5% from 4.8-5.6% because of weak private investment.
  • Domestic demand slowed slightly in Q4 rising 4.9% y/y after 5.0% in Q3 driven by a slowdown in government consumption growth to 4.2% y/y from 4.6% y/y. Private consumption was slightly stronger at 5.0% y/y from 4.9%, the highest since Q3 2023 and in line with growth over the last three years. GFCF grew at 5.0% y/y after 5.1% in Q3.
  • Export growth slowed to 7.6% y/y in Q4 after 9.1% but 2024 saw an improvement to 6.6% from 1.3% the previous year.
  • USDIDR is off its Monday high of 16471 helped by BI intervention and market stabilisation following deals to delay US tariffs on Mexico and Canada. USDIDR is at 16309, which is slightly lower than January 15, the last BI decision, which should reassure BI.

Indonesia growth y/y%

Keep reading...Show less