By Pranoy Krishna
BENGALURU (Reuters) – Indonesia’s economy likely grew 5.0% in the July-September quarter from a year earlier, nearly matching the Q2, 2024 growth rate, as robust consumption offset weak exports, according to a Reuters poll of economists.
Southeast Asia’s largest economy has consistently expanded around 5% for over a year now, as consumer demand has held up despite higher interest rates.
Meanwhile exports from the commodity rich country remain sluggish.
The poll of 29 economists taken from Oct. 28 – Nov. 1 showed the economy grew 5.00% in Q3, 2024, slightly lower than the 5.05% in the prior quarter.
“Domestic demand, especially private consumption, will remain the driving force behind GDP growth,” said Jeemin Bang, associate economist at Moody’s (NYSE:MCO).
“Retail sales grew year-on-year throughout the third quarter, led by the major categories of food and automobiles.”
Retail sales rose 5.8% in August, a four-month high.
However, growth on a quarter-on-quarter basis more than halved to 1.6% in the July-September period from 3.8% in Q2, 2024, suggesting weak demand from China was affecting the commodity export-led economy.
A slowdown in demand from China saw exports moderating to 6.44% in September, from 7.13% in the month prior to that.
“Being a major commodity exporter, Indonesia is sensitive to changes in global demand conditions. Given China is Indonesia’s biggest export partner, its subdued performance will weigh on Indonesia’s exports,” added Jeemin.
The economy was forecast to grow around 5.0% this year and next, a separate Reuters survey showed.
Bank Indonesia estimates a growth rate of 4.7% to 5.5% for 2024.