Household still played the most important role as it contributed 51.5% to GDP. It grew at 2.42% QoQ (5.51% YoY) in 2Q22. The growth was on the back of Ramadan momentum and the ease of Covid-19 cases back then.
Statistics Indonesia (BPS) recorded 0.64% MoM (4.94% YoY) of inflation in Jul-22 or the highest since Oct-15 where it was at 6.25% YoY. The rate was higher than our estimate and consensus at 4.72% and 4.82% YoY.
Indonesia briskly rebounded as the economic growth jumped from -0.74% YoY in 1Q21 to 5.01% YoY in 1Q22. For 1H22, we predict it will grow at 4.7% YoY emphasizing the consistent economic recovery amid the pandemic.
The slower import was still associated with China’s as its economy shrank sharply in 2Q22 recording a 0.4% YoY (vs 4.8% YoY in 1Q22) of economic growth after several Covid-19 lockdowns.
The export plummeted due to the palm oil export ban to curb the rising domestic inflation from cooking oil prices hike in May-22. Besides, the slower import was still associated with China’s feeble economy as the China government still imposes several lockdowns there.
Statistics Indonesia (BPS) recorded 0.66% MoM (2.64% YoY) of inflation in Mar-22. The inflation rate was higher than our estimate at 2.61% YoY and Bloomberg consensus at 2.53% YoY.
The inflation will go up with decent pace in 2H22 as the price normalization goes on especially on food and transportation prices after Ramadan month and the fuel price hike lately. Besides, the core inflation showed a slight deceleration compared to the previous month.
Current account balance posted a USD0.22 bn surplus in 1Q22 (0.07% of GDP) or lower than consensus at USD0.92 bn of surplus.
The export benefited from the elevated commodity prices while the import slowed down following China’s weaker economy last month.
The thick trade surplus provides liquidity and stronger external resilience for Indonesia. We may witness the trade surplus persists in 2Q22 if several countries reimposing mobility restrictions due to the Covid-19 cases, just like China.
Related to the rising global political tension between Russia and Ukraine, we assess that the war has no major direct impact so far but indirect impact, ranging from food prices to energy.