Deputy Finance Minister Suahasil Nazara announced that the second quarter was expected to see strong spending levels as a result of eased mobility restrictions and the Ramadan-Idul Fitri festive period, improved investment growth due to escalating business activity and stronger net exports due to high commodity prices.
The Finance Ministry's projection comes as rising global inflation emerges as a key risk to Indonesia's economic growth, with rising prices on basic goods likely to deter spending. However, inflation remains within Bank Indonesia's target range of 2 to 4 percent. Coordinating Economic Affairs Minister Airlangga Hartarto said on May 11 that Indonesia's GDP would grow 3.5 to 4 percent yoy in the second quarter, a more conservative estimate compared to the Finance Ministry's.
Meanwhile, Indonesia’s trade surplus reached a record high in April, surpassing the previous peak in October 2021, as soaring coal, palm oil and metal prices boosted exports. Indonesia's Manufacturing Purchasing Managers’ Index dropped by 1.1 points to 50.8 in May because of supply constraints and lower business optimism compared to the previous month, according to business intelligence firm IHS Markit, a subsidiary of S&P Global.