The Indonesian economy has finally exited the recession.
The end of the slump occurred as the Indonesian economy grew in the second quarter of 2021 by 7.07 percent.
With this achievement, the Indonesian economy – which has experienced negative for the previous four quarters – has managed to return to the positive zone, meaning it no longer meets the technical definition of recession.
Statistics Indonesia (BPS) stated that, when compared to quarterly and annual terms, the growth that occurred in the second quarter was higher than the first quarter of 2021, which was minus 0.74 percent and the second quarter of 2020, which was minus 5.32 percent.
Meanwhile, cumulatively, Indonesia’s economic growth will be 3.1 percent in the first half of 2021 compared to the first semester of 2020.
“Economic growth grew 3.31 percent Q-on-Q and 7.07 percent Y-on-Y,” said Statistics Indonesia’s Head, Margo Yuwono, during the virtual announcement of Indonesia’s economic data for the second quarter of 2021.
He added that, based on nominal values, the basis of constant prices (ADHK) reached Rp2,772.8 trillion in the second quarter of 2021. While on the basis of the current price (ADHB) reached Rp4,175.8 trillion in the same period.
Margo explained that the realisation of this growth was influenced by export growth which increased by 10.36 percent from the first quarter of 2021 and grew 55.89 percent from the second quarter of 2020. The increase in exports occurred due to the recovery in global trade and increased demand from a number of trading partner countries.
“The role of exports is very meaningful for Indonesia’s economic growth,” he added.
In addition, the increase in imports confirmed the growth of the domestic economy, with an increase in imports of 50.12 percent from the second quarter of 2020 and an increase of 9.88 percent from the first quarter of 2021.
Internally, Margo said that economic growth has also been supported by increasing community mobility in the second quarter of 2021. This was reflected in the increased mobility of people to shopping places outside of cities which was monitored through travel using various modes of transportation.
“For example, domestic flights for April, May, and June 2021 were better than April, May and June 2020,” he said.
Furthermore, the increase in mobility increased the level of public consumption and investment. One indicator to reflect this is motorcycle sales, which rose 10.65 percent in the second quarter from the first quarter of 2021 and 268.64 percent from the first quarter of 2021.
“It is also reflected in the increase in PPh 21 by 5 percent and VAT on luxury goods by 8 percent,” he said.
Meanwhile, when compared to a number of trading partner countries, the growth rate is below Singapore’s 14.3 percent, the European Union’s 13.2 percent, the United States’ 12.2 percent, China’s 7.9 percent, and Hong Kong’s 7.5 percent. However, it is higher than Vietnam’s 6.6 percent and South Korea’s 5.9 percent.
“In the second quarter of 2021, the economies of several of Indonesia’s trading partner countries have shown positive growth. This improvement is not only due to the economic recovery but also due to a low base in the previous quarter,” he explained.
This was influenced by the growth of the global PMI index which rose from 54.8 percent to 56.6 percent in June 2021. It was also supported by rising world commodity prices, such as wheat, palm oil, soybeans, tin, aluminium, and copper.
The realisation of this growth is in line with the target of President Joko Widodo (Jokowi) of reaching 7 percent. Likewise, it matches the expectations of Finance Minister Sri Mulyani, which range from 7 percent to 7.5 percent.