INDONESIA’S economic growth likely slowed in the fourth quarter of 2022 as declining commodity and energy prices hit exports, and a widely expected global recession could accelerate the slowdown this year, a Reuters poll found.

South-east Asia’s largest economy exported a record US$292 billion in 2022, driven by high global commodity prices that boosted the value of the rupiah and improved the country’s current account.

But export growth slowed in the latter part of the year as prices moderated.

After reporting its strongest annual growth in more than a year in the third quarter, the resource-rich economy expanded by a weaker 4.84 per cent in October-December compared with the same three-month period a year earlier, according to the median forecast of 21 economists in the poll.

If realised, it would be the slowest growth rate in over a year.

Forecasts for gross domestic product growth, due to be released on Feb 6, ranged from 4 per cent to 6.2 per cent.

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On a quarterly basis, growth was expected to have eased to 0.33 per cent, down from 1.81 per cent in the third quarter. That was based on a smaller sample of forecasts.

“Indonesia‘s economic growth is going to slow in line with the ongoing global slowdown. The ongoing global recession has dampened prices and demand for commodities,” said Suryaputra Wijaksana, an economist at Bank Central Asia.

“Global decoupling also disrupted demand for Indonesia‘s exports. It contributed to slowing growth by reducing investment and domestic consumption as commodity-related sectors impacted negatively,” he added.

Economists in the poll expected a bleaker outlook as tightening monetary policy and elevated inflation globally risk derailing the global economy.

Growth was forecast to have averaged 5.3 per cent last year, but a separate Reuters poll said that rate would slow to 4.8 per cent this year, still well within the range of Bank Indonesia‘s projection of 4.5 per cent to 5.3 per cent.

“With commodity prices set to drop back, weaker global demand likely to weigh on exports, and tighter monetary policy dragging on the domestic economy, we think the risks are firmly to the downside,” said Gareth Leather, senior Asia economist at Capital Economics.

But some economists were hopeful that China’s reopening would boost the country’s exports of resources such as palm oil, coal, nickel and iron.

“We are quite optimistic about growth in 2023, having robust domestic consumption recovery, and the potential of China’s full reopening this year,” said Irman Faiz, an economist at Bank Danamon. REUTERS