VIEW: SocGen Expects Growth To Slow Over 2023

Indonesia’s Q2 GDP was stronger than expected rising to 5.2% from 5% y/y but Societe Generale can’t “reveal any major growth driver that one can bank upon during this phase of normalising economic activity” and remains pessimistic about the growth outlook. It continues to find it unlikely that real GDP will exceed 5% y/y in 2023, as government spending should be pulled back.

• “The stronger-than-expected real GDP growth is essentially due to the deflator. With the GDP deflator falling to its lowest ever level aside from the brief COVID period, nominal GDP grew by a mere 6.7%, yet real GDP growth was as high as 5.2%.”
• “While growth in domestic consumption moved north of 5% thanks to some government support after two quarters of sub-5% prints, consumption’s share of GDP dropped in the quarter.”
• “Worryingly, investment’s share of GDP shows no sign of breaking the fall and dropped below 30% for the first time, as per the data series. Economic activity was essentially pulled up by sharply higher government expenditure.”