2023 economic growth forecast: Strong performance in Q1

This article has been translated by PwC Indonesia as part of our Indonesia Infrastructure News Service. PwC Indonesia has not checked the accuracy of, and accepts no responsibility for the content.

Bisnis Indonesia - Proyeksi pertumbuhan ekonomi 2023: Laju kuat di kuartal pertama

1 February 2023

By: Dionisio Damara and Maria Elena


Jakarta - The government is optimistic about economic growth in the first quarter of 2023 surpassing the growth in 2022. Economic activities at the start of this year are predicted to increase public consumption.

Finance Minister Sri Mulyani Indrawati said that the indicator for the economy strengthening in the first quarter of 2023 was reflected in public activities that kept on increasing, especially after the lifting of the public activity restrictions (PPKM) at the end of last year.

Besides that, the Finance Minister said that Ramadan and Eid activities from March to April 2023 improved the economic prospect in the first quarter of 2023.

“We see that the economic recovery momentum in 2023 is still strong. The first quarter of 2023 inshallah (God willing) will be stronger than the first quarter of 2022 as 2022 is when the omicron variant surfaced. So, we predict that, in the first quarter of 2023, the growth momentum will remain strong,” she said during the press conference for the Coordination Meeting on Financial System Stability on Monday (31/1).

Based on the data, economic growth in the first quarter of 2022 reached 5.01%. Meanwhile, in the first quarter of 2020 and the first quarter of 2021, economic growth reached 2.97% and minus 0,7% respectively.

According to her, the positive momentum in the first quarter of 2023 can be continuously maintained until the end of the year despite the International Monetary Fund (IMF) cutting the national economic growth. She believes that the national economy can grow around 5% or even to approach the assumption set in the 2023 state budget (APBN) that reaches 5.3%.

Moreover, for economic growth until the end of 2022, the Finance Minister predicted that Indonesia’s economy would grow around 5.2% to 5.3%.

“It will be announced next week by BPS (Statistics Indonesia). The total is the same as what I said, which is around 5.2% to 5.3% for 2022. So, [growth] in the fourth quarter of 2022 surpassed 5%,” she stated.

During the occasion, Bank Indonesia (BI) Governor Perry Warjiyo observed that Indonesia’s strong economic growth prospect was one of the factors that could strengthen rupiah’s exchange rate.

Perry believes that rupiah’s stability will continue to improve in the future, sustained by several factors. First, Indonesia’s economic growth is reckoned to be quite good.

“Compared to the global economic growth and several countries in the emerging market, Indonesia is one of the higher ones with 4.8%, which is higher than China’s growth forecast that reaches 4.5%,” he said.

Second, controlled inflation. Perry stated that core inflation and consumer price index inflation were under 4% in the first half of 2023. Besides that, the central bank forecasts that consumer price index inflation will be under 3.5% at the end of 2023.

That prediction contradicts the global inflation that is predicted to reach 5% at the end of this year.

Third, ongoing transactions throughout last year reached the highest surplus in history. According to him, that positive trend will continue this year.

Fourth, interesting returns. Perry said that the yield of government securities offered interesting returns compared to the yield of the US Treasury or others.

“Year to date, the inflow is quite high reaching Rp5.8 trillion,” he said.

The last factor is BI’s commitment to maintaining the stability of rupiah’s exchange rate and to directing it in line with the fundamentals. This is implemented to support the ongoing economic recovery in the country.

Meanwhile, the Financial Services Authority (OJK) Board of Commissioners Chairperson mentioned that the stability of the financial sector and the financial performance was quite maintained. The intermediation function in financial services institutions grew above expectations.

Banking loan distribution until December 2022 grew 11.35% year-on-year (YoY) in line with the recovery of the national economy. Loan growth is sustained by the demand of working capital loans that grew 12.17% and corporate debtor loans that reached 15.44%.

Meanwhile, third party funds grew 9.01%, sustained by reserve deposit funds that increased by 18.78%.

The same goes for the financing industry that grew up to 14.18% YoY. Meanwhile, premium collection in the insurance industry reached Rp27.63 trillion in December 2022.

Premium collection consists of life insurance and general insurance premiums that reached Rp16.41 trillion and Rp11.22 trillion respectively in December 2022.

In line with the premium growth, Mahendra said that OJK was continuously encouraging policy holders and the people to have an insurance.

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