Minister of Finance (Menkeu) Sri Mulyani acknowledged that the actual economic growth in the third quarter of 2023 at 4.94 percent (year on year/yoy) was significantly lower than the government's expectations.

According to the BPS report, Indonesia's economic growth in the third quarter of 2023 was recorded below 5 percent, specifically 4.94 percent annually (yoy) and 1.60 percent quarterly (quarter to quarter/qtq). This figure indicates a slowdown compared to the second quarter of 2023, which reached 5.17 percent (yoy).

Sri Mulyani explained that the government had anticipated an economic slowdown in the third quarter of 2023, but the consumption data released by BPS was lower than the government's expectations.

"Although consumer confidence levels appear high, the actual consumption level did not reach the level we had hoped for. This requires further evaluation to understand its impact, such as the psychological effects of El Nino, rising rice prices, and other factors," she said during a press conference on the GDP for the third quarter of 2023, on Monday, November 6.

However, Menkeu acknowledged that some data showed positive improvements, particularly in the consumption of Gross Fixed Capital Formation (PMTB), which grew by 5.77 percent, surpassing government projections.

"This is in line with what was mentioned earlier, especially in the manufacturing sector and the inflow of capital. So, this is still a positive story for Indonesia that we will strive to maintain," added Sri Mulyani.

Additionally, according to the BPS report, the economic growth slowdown is also evident from the government's consumption decrease, which contracted by 3.76 percent in the third quarter of 2023, driven by a decrease in employee expenses, expenditure on goods, and social assistance spending.

Exports also contracted, particularly in non-oil and gas exports such as mineral fuels, fats and vegetable oils, electrical machinery, as well as oil and gas exports such as natural gas from oil and crude oil.

From a business perspective, the economic slowdown is caused by the agricultural sector, which is one of the impacts of the El Nino phenomenon, especially for food crops and plantations.

Nevertheless, household consumption, Gross Fixed Capital Formation (PMTB), and the consumption of Non-Profit Institutions Serving Households (LNPRT) continued to grow positively in the third quarter of 2023.

Household consumption grew by 5.06 percent, PMTB by 5.77 percent, and LNPRT consumption increased by 6.21 percent, driven by increased electoral activities such as national meetings, regional meetings, national coordination meetings, and national reconciliation, which constitute the main contribution to Gross Domestic Product (GDP) by expenditure.