- The Indonesian economy expanded 5.05% yoy in 2Q24, similar to quarter before.
- We expect slight moderation in 2H pace, with sentiment surveys softening at the margin.
- Implications for forecasts: We maintain our growth forecast for 2024.
- With US Fed’s anticipated dovish pivot in Sep and likely USD pullback..
- .., BI might bring forward its first cut to late 2024, subject to the IDR.
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2Q GDP growth maintains a steady pace.
Indonesia expanded 5.05% yoy in 2Q24, maintaining a similar beat as the quarter before, but gained on qoq terms (+3.8% yoy vs -0.8% in 1Q). Domestic activity was the main source of support, led by investments and stock build-up, consumption rose by a slower pace. While household consumption grew 4.9%, the largest reversal was in the government and NPISHs (non-profit institutions serving households), which slowed to 1.4% and 10% respectively, reflecting the passage of election related lift. As a result, total consumption slowed to 4.6% yoy from 6.6%, while capital formation rose 4.4% vs 3.8% in 1Q. The breakdown shows that investments, likely frontloading of public-sector projects, helped to lift ‘machinery and equipment’ while building & structures slowed. Mineral processing related activity was also likely behind the better faring investment segment. Negative price effects from commodities continued to restrain trade performance, with this segment’s contribution at a tepid 0.2bp vs average 0.7bp in 2023. On the industry end, manufacturing activity maintained a steady gait, while farm output posed a comeback after weather-related output cut.
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