POLL-Indonesia Q4 GDP Seen Up Nearly 5% On Exports, Improved Consumption

MACROECONOMICS - BENGALURU. Indonesia's economy grew 4.9% in the final quarter of 2021 as exports from the resource-rich economy surged amid a rise in global commodity prices while an easing of COVID-19 restrictions improved domestic consumption, a Reuters poll showed.

Southeast Asia's largest economy has reported a trade surplus since May 2020 on robust exports as commodity prices rose for coal, palm oil, copper, tin, steel and rubber. The 2021 trade surplus was the highest in 14 years.

"In the final quarter of 2021, the COVID caseload had receded sharply, alongside a ramp-up in vaccination, allowing for looser social distancing measures," wrote Radhika Rao, senior economist at DBS Bank.

"This likely led to further normalisation in domestic activity, which coupled with a strong commodity-driven run in exports, is expected to have translated into a higher headline growth in 4Q."

The Jan. 24-Feb. 3 poll showed the economy expanded 4.90% in the October-December quarter, according to the median forecast of 17 economists, nearly matching the government forecast of around 5%. It would also be higher than the 3.51% growth reported in the July-September quarter.

On a quarter-on-quarter basis, growth was expected to have slowed to 0.99% from 1.55% in the third quarter. That was based on a smaller sample of forecasts.

A separate Reuters survey in January showed economists forecast 2022 growth at 5.1%, within the range of Bank Indonesia's projection of 4.7%-5.5%.

"We expect 2022 real GDP to grow by 5.0% yoy. However, if the nascent fourth wave of COVID infections assumes dangerous proportions, there could be downside risk to our expectation," wrote Kunal Kundu, economist at Societe Generale, in a note.

"While domestic demand has been buoyed by benign retail inflation, pent up demand, tax incentives and income support, we expect these growth drivers to lose vigour in 2022 as the government plans to slowly wean the economy off fiscal support."