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Indonesian economy grows for first time in five quarters

·2-min read

Indonesia's economy bounced back in the second quarter to post its first growth in more than a year, but analysts warned the recovery might be short-lived as Covid-19 surges.

Southeast Asia's largest economy grew by 7.07 percent in the April-to-June quarter compared with the same period last year, the Central Statistics Agency (BPS) said Thursday.

The figure is higher than a projection by the Central Bank of Indonesia, which predicted growth of 6.75 percent.

The expansion, the first positive figure in five quarters, was driven by a pick-up in exports and imports as Indonesia's trading partners also saw greater activity.

"For the economy to keep growing, the key is how we manage the health sector, comply with health protocols and vaccinate people to reach herd immunity," BPS head Margo Yuwono told a press conference.

Domestic consumption also contributed to the comeback with motorcycle and car sales jumping 2.5 and 7.5 percent respectively compared with the first quarter.

Greater business activity and more public mobility as a result of pandemic restrictions being relaxed also contributed to the recovery, Yuwono added.

But analysts believe Indonesia will struggle to record continued growth as a virus surge triggered by the Delta variant wracks the country.

"Indonesia's economy is struggling badly, with Q2 GDP data showing that the recovery lost some momentum even before the latest surge in virus cases," Gareth Leather, a senior Asia economist for Capital Economics, said in a statement.

The archipelago has reported more than 3.5 million infections and over 100,000 deaths from Covid-19 though official figures are widely believed to be an underestimate.

It has never implemented a full lockdown but introduced restrictions in early July limiting travel and non-essential business activity.

Last year the country's economy shrunk 2.07 percent as it entered its first recession since the 1997 Asian financial crisis.

The central bank recently cut its 2021 GDP growth forecast to between 3.5 percent and 4.3 percent.

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