Bank Indonesia : Central Java Economy Records 5.66 Percent Growth in the Second Quarter of 2022

JAKARTADAILY.ID – Central Java's economic recovery in the second quarter of 2022 is stronger. Bank Indonesia Central Java Province released data that the economy of Central Java in the second quarter of 2022 grew 5.66 percent (YoY), an increase compared to the previous quarter which was 5.12 percent (YoY) and better than the national economy 5.44 percent; YoY.

On the expenditure side, the source of Central Java's economic growth comes from household consumption (RT) and foreign exports. Meanwhile, in terms of business fields (LU), Central Java's largest source of GRDP growth comes from LU transportation and warehousing, provision of accommodation and food and drink, and agriculture.

From the expenditure side, household consumption (RT) and foreign exports are the sources of economic growth in the second quarter of 2022, while government consumption and investment are still contracting.

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Household consumption grew by 6.14 percent and contributed 3.62 percent. The improvement in household consumption is in line with the increase in consumption during the fasting month and Eid al-Fitr, school holidays, and increased community mobility after the easing of the PPKM.

In addition, a number of Government and Bank Indonesia policies, such as relaxation of sales tax on luxury goods (PPnBM), loan to value (LTV) property and motor vehicles, as well as Government Borne Value Added Tax (PPN DTP) incentives, also helped maintain consumption improvements.

Foreign exports grew by 35.01 percent, driven by an increase in oil and gas exports by 136.05 percent. Meanwhile, Central Java's non-oil exports grew by 22.94 percent moderated compared to the previous quarter (30.37 percent)

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The moderation in non-oil and gas exports was caused by a decline in exports of wood and furniture products due to problems with the Forest Stewardship Council (FSC) ecolabel certificate, and a decrease in demand from trading partner countries, especially the United States. Meanwhile, Central Java's foreign imports slowed (from growing 14.69 percent to 9.00 percent), especially in imports of raw materials and consumer goods.

From the business field (LU), the largest source of growth for Central Java's GRDP came from transportation and warehousing (89.34 percent), as well as accommodation and food and drink supply (growing 18.44 percent), in line with the implementation of the policy travel easing.

Agricultural LU was also a source of growth with 4.93 percent growth, driven by corn harvests in the central region of Central Java and the implementation of the IP400 cropping index for rice.

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However, the performance of the manufacturing industry as the main foreign currency for Central Java slowed, from growing 4.78 percent in the previous quarter to 4.06 percent this quarter.

The slowdown was caused by a downward trend in global demand due to rising inflation in trading partner countries of Central Java, especially the United States, as well as the protectionist attitude of several fertilizers and food-producing countries.