MacroInsight  /   Click here for full PDF version 
 Author(s):  Luthfi Ridho    ;Samantha  Junita 

• GDP growth accelerated to +5.1% yoy in 1Q24 (+5.04% yoy in 4Q23), tad higher than consensus/ours expectation at 5.08/5.04% yoy.
• Consumption rose to +6.6% yoy in 1Q24, while investment decelerated to +3.8% yoy, both in-line with political year seasonality.
• We expect GDP growth to be relatively stable at c.5% yoy in FY24 due to higher consumption at c.6% but offset by investment at c.3.2% yoy.

Consumption was supported by three big events during 1Q24
GDP growth accelerated to 5.1% yoy in 1Q24 (+5.04% yoy in 4Q23), tad higher than consensus/ours expectation at roughly +5.08/5.04% yoy. This was supported by consumption at +6.6% yoy (4.5% yoy in 4Q23) but offset by further deceleration in investment +3.8% yoy (+5.0/+5.8% yoy in 4Q/3Q23) - see fig. 7. The increase in consumption and decelerating investment were in-line with the seasonality of political year, where election-related spending is rising and investments shift into a wait and see mode. In addition, the increase in consumption was also impacted by the coincidence of Chinese New Year, National Election and Eid Festivity.
Investment decelerated but helped by the spending on new capital city
Investment grew slower at +3.8% yoy in 1Q24 (+5.0% yoy in 4Q23) mostly from lower growth in the private sector at c.+3.5% yoy (c.+4.2% yoy in 4Q23). In the meantime, government investment stabilizing to c.+7.1% yoy (c.+11.2% yoy in 4Q23) due to lower spending growth for the new capital city development at +17.8% yoy (+56.5% yoy in 4Q23).Our discussion with officials suggests a continuation of IKN spending in FY25.
Expect economic growth at c.5% in FY24
We think the growth in 1Q24 will be the highest quarterly growth in FY24, amid the aforementioned factors. We expect economic growth to be relatively stable at c.5% yoy in FY24 due to higher consumption at c.+6.0% but offset by investment at +3.2% yoy. Growth will also be supported on the back of (1) clear election outcome may attract higher-than-expected FDI in the 2H24 and (2) accelerating government consumption at c.+9.1% yoy (2.9% yoy in FY23) as more social aid to be distributed and acceleration of national projects.


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