Macroeconomics Analysis Series: Indonesia Economic Outlook, Q3-2021

Despite still being in negative territory, GDP growth of Indonesia is the closest it gets to the positive rate since the outbreak. Recorded at -0.74% (y.o.y), the Indonesian economy in Q1 2021 enjoyed a less severe contraction in almost all sectors than the previous three quarters. In addition, several sectors that enjoyed a rather positive growth during the pandemic were still recording an expansion in the first quarter of 2021. Diving deeper to its sectors, manufacturing industry as the biggest sector in the Indonesian economy with the contribution of more than a fifth, recorded a growth of -1.38% (y.o.y) in Q1 2021, a rather substantial increase from -3.13% (y.o.y) in the last quarter of 2020. Similarly, wholesale and retail trade as another major sector in the economy with the contribution of 13% to the national GDP, grew -1.23% (y.o.y) in Q1 2021 from -3.66% (y.o.y) in Q4 2020. As PPKM were in place during most of Q1 2021, it comes as no wonder, all expenditure components of GDP shrank, except for government consumption, exports, and imports. Beside disruption coming from Covid-19 pandemic, negative growth in most expenditure components is because we are comparing with Q1 2020 when the pandemic has not fully escalated domestically.

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