POLL-Indonesia's GDP growth set to slow in Q3 as COVID-19 curbs bite

November 03, 2021, 08.42 AM | Source: Reuters
POLL-Indonesia's GDP growth set to slow in Q3 as COVID-19 curbs bite

ILUSTRASI. economic growth


With year-end holidays just around the corner, festive gatherings and increased mobility could trigger a third wave of COVID-19 infections. That, along with an economic slowdown in China, Indonesia's biggest trade partner, would pose a significant risk to the resource-rich country.

For now, Indonesia is benefiting from a surge in exports thanks to booming demand for commodities. The accompanying jump in prices meant Indonesia's trade surplus was larger than expected in September, according to government data.

Strong exports may help cushion some of the negative economic impact of the pandemic, economists say.

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"Economic activity has started to recover following the easing of virus curbs in the later part of Q3, with indicators such as mobility, consumer confidence, loan demand and the PMI showing improvement," said Krystal Tan, economist at ANZ.

"The upshot is that Indonesia's economy is gradually regaining a better footing and rising commodity prices are a boon for the resource-rich economy," Tan said.

A larger trade surplus may also help the country narrow its current account deficit, making its financial markets less vulnerable to capital outflows and allowing Bank Indonesia to keep monetary policy accommodative for longer.

The central bank is expected to keep its main policy rate unchanged at a record low of 3.50% until the third quarter of 2022, a separate Reuters poll showed.

Editor: Yudho Winarto

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