Declining Purchasing Power, Slower Economic Growth in Q3 2024

JAKARTA. Statistics Indonesia (BPS) reported that Indonesia's economic growth in the third quarter of 2024, as measured by gross domestic product (GDP), slowed down to only 4.91%.

In comparison, Indonesia's GDP growth in the second quarter of 2024 was recorded at 5.05%. The government attributes this slowdown to the decline in purchasing power among the middle class.

Quoting kontan.co.id, Mari Elka Pangestu, Deputy Chairperson of the National Economic Council, stated that to maintain public purchasing power, the government must optimize its spending budget to stimulate economic activities. In the long term, the government needs to improve the investment climate. 

Sources of Growth

In terms of expenditure, the largest source of economic growth comes from household consumption expenditure, contributing 2.55% with a growth rate of 4.92%.

The next largest contributors were exports and imports, which grew by 6.21% and 6.92% respectively.

Meanwhile, government consumption expenditure and gross domestic fixed capital (PMTB) grew by 7.47% and 4.47% respectively. Meanwhile, consumption of the non-profit institutions serving households (LNPRT), despite growing the highest, at 15.10%, contributed only 0.14%.

When viewed by type of business activity, the manufacturing industry remains the largest contributor to GDP in Q3 2024, with a contribution of 0.96% and a growth rate of 4.27%.

Following that, the construction industry contributed 0.71%, with a growth rate of 7.46%. The third-largest contributor was wholesale and retail trade, as well as motor vehicle and motorcycle repairs, with a contribution of 0.63% and a growth rate of 4.76%. (ASP/KEN)