Indonesia's economy from July to September 2023 posted a 4.94% growth compared to the same quarter last year (y-to-y) with its Gross Domestic Product (GDP) at current prices reaching Rp5,296.0 trillion, or at constant 2010 prices reaching Rp3,124.9 trillion, Indonesia's Statistics Agency (BPS) reported on Monday, November 7.  

Falling short of economists' forecast of 5.05%, the third quarter's 4.94% growth was lower than the 5.17% annual growth of the second quarter in the same year, which is its lowest level in two years. 

Acting Head of BPS Amalia Adiningrat Widyasanti explained that Indonesia's economic growth slowdown was due to seasonal factors. 

"This is in line with the pattern that usually occurs in previous years where growth in the third quarter is always lower than the second quarter except in 2020, when the pandemic occurred," said Ms. Widyasanti during a press conference at the BPS office in Jakarta on Monday.   

Despite the weakened growth, Ms. Widyasanti said that Indonesia's economy was still “solid and positive” amidst the turbulent global economy and declining prices of important export commodities.   

In terms of growth sources, household consumption continued to be the main driver of the economy in the third quarter, accounting for 52.62% of total GDP growth and growing at a rate of 5.06% (y-o-y). Still, the growth was lower than the 5.22% growth in the second quarter of 2023. 

According to Ms. Widyasanti, the reasons behind the decline in consumption were events that happened both nationally and internationally in the second quarter of 2023 but did not recur in the third, including religious holidays like Eid al-Fitr and Eid al-Adha.  

From the business fields perspective, the three sectors that posted the highest growth (q-to-q) were construction, which grew by 5.87%, followed by mining and quarrying at 5.31%, and electricity and gas procurement at 3.77%.   

In terms of contribution, the processing industry business sector accounted for 18.75% of Indonesia's GDP, followed by agriculture, forestry, and fisheries (13.57%), wholesale and retail trade, car and motorcycle repairs (12.96%), mining and quarrying (10.18%), and construction (9.86%). These five industries accounted for 65.32% of the Indonesian economy.  

Geographically, the provinces on the island of Java continued to play a major role in the Indonesian economy in the third quarter of 2023, accounting for 57.12% of GDP. Sumatra Island comes in second at 22.16%, Kalimantan Island at 8.08%, Sulawesi Island at 7.25%, Bali and Nusa Tenggara islands at 2.80%, and the islands of Maluku and Papua at 2.59%. 

Despite a lower contribution, the provinces on Maluku Island and Papua recorded the highest economic growth rate (y-on-y) at 9.25%. Sulawesi Island came in second at 6.44%. Sumatra Island and Kalimantan Island came in third at 4.83%, and the islands of Bali and Nusa Tenggara posted 3.43%.