Rocket cone reads 5.12%
Black smoke reads: Tax revenue down, automotive sales weak, sluggish bank loans, wave of layoffs, tariff hikes
The Institute for Development of Economics and Finance (INDEF) has expressed doubts over the credibility of the National Statistics Agency's (BPS) second-quarter economic growth figure of 5.12 percent, calling it an "anomaly" that does not reflect the real economic situation.
The head of INDEF's Centre of Industry, Andri Satrio Nugroho, questioned how growth could have risen in Q2 to overtake the 4.87 percent recorded in Q1 during a traditionally a weak period without the boost of the Ramadan fasting month and the Eid al-Fitr holidays spending.
"Is this economic growth an anomaly? Or is there some window dressing at play?", Nugroho asked during a public discussion on August 6. "It's surprising that growth is stronger in a quarter without the Ramadan effect".
Nugroho also highlighted a disconnect between macroeconomic data and industry reports, particularly from retailers, who have reported sluggish sales and weakening purchasing power, which is reflected in the popular terms Rojali and Rohana, used to describe mall visitors who window shop but make few purchases.
INDEF senior economist Fadhil Hasan echoed these concerns pointing to indicators such as declining household consumption, falling vehicle sales and a drop in the consumer confidence index. He also cited foreign direct investment (FDI) which fell to 202.2 trillion rupiah in Q2 from 217.3 trillion rupiah the previous year.
Hasan also noted that tax revenue, including value-added and luxury tax were down, contradicting the narrative of strong economic growth. "The official 5.12 percent figure is well above the analyst consensus of around 4.8 percent. That calls for greater transparency and accountability from the government in reporting growth", he was quoted as saying by the Jakarta Globe.
Coming just over a week before Indonesia's Independence Day celebrations on August 17, when President Prabowo Subianto is due to give a state of the nation address, many have speculated that the BPS may have inflated the growth figure. The president's state address is typically used to highlight the government's social and economic achievements over the previous year,
The government however has been quick to dismiss such suggestions with Economic Affairs Minister Airlangga Hartarto claiming that the weakening consumption narratives fail to reflect shifting consumption patterns, particularly the migration from offline to online shopping.
"What we're seeing is not a decline in spending, but a change in consumer behaviour", Airlangga told reporters in Jakarta on August 5. "Retail sales are rising in both offline and online channels", he said.
