JAKARTA: Indonesia’s economy expanded faster than expected in the third quarter amid elevated price pressures and higher borrowing costs.
Gross domestic product rose 5.72% in the three months to September from a year ago, the statistics office said. That’s the fastest increase in more than a year and beats the median estimate of a 5.6% gain in a Bloomberg survey.
Compared with the previous quarter, output expanded 1.81%, surpassing the consensus for a 1.71% rise.
South-East Asia’s largest economy sustained its growth momentum despite the increase in fuel prices in early September, adding to pressures on inflation near a seven-year high.
Bank Indonesia has raised the policy rate by 125 basis points since August, including two successive half-point hikes.
To protect lower income consumers, the government had disbursed various social aids, aiming to maintain the tempo of consumer spending, which accounts for more than half of domestic output.
The boom in commodity exports continued to bolster the nation’s external trade, even as imports gained pace on capital goods demand to support business activities.
Foreign direct investment surged to a record last quarter as the government pushed for more downstream projects in nickel, copper and other resources. A darkening outlook on the global economy could weigh on growth in the coming quarters. — Bloomberg
