Bisnis.com, BANDUNG -- Bank Indonesia West Java explained the causes of weakening economic growth in West Java in the third quarter of 2023.

Based on data released by the West Java Central Statistics Agency (BPS), West Java's economy in the third quarter of 2023 grew by 4.57% (yoy).

This growth slowed compared to the previous quarter which reached 5.25% (yoy).

Head of the West Java Bank Indonesia Representative Office, Erwin Gunawan Hutapea, said that this slowdown was caused by still weak export demand which had an impact on decreasing the performance of the processing industry sector as the main contributor to the West Java economy.

Apart from that, the contracting growth in government spending has also become a barrier to higher economic growth.

Furthermore, El-Nino, which affects the performance of the agricultural sector, also holds back the acceleration of West Java's economic growth in the third quarter of 2023.

From the demand side, the source of West Java's economic growth in the third quarter of 2023 is driven by growth in household consumption of 5.83% (yoy), consumption of Household Non-Profit Institutions (LNPRT) of 21.17% (yoy), as well as investment of 8.40% (yoy).

The increase in household consumption is driven by community mobility which remains high, especially in tourism activities and maintained people's purchasing power.

This is reinforced by the results of the Bank Indonesia Consumer Survey, namely the Consumer Confidence Index, which remains recorded at an optimistic level of 106.17 in the third quarter of 2023.

"Apart from that, the high level of various preparatory activities for the 2024 General Election will also have a positive impact on LNPRT consumption performance in West Java," he said, Tuesday (7/11/2023).

Furthermore, investment realization in West Java until the third quarter of 2023 reached IDR 153.2 trillion, which is also the highest nationally.

In terms of the business sector, West Java's economic growth is still positive, supported by increased performance in several sectors, including the transportation and warehousing sector (12.44% yoy), the food and drink accommodation provision sector (7.76% yoy), the construction sector (5 .88% yoy) as well as the wholesale and retail trade sector (4.32% yoy).

The positive performance of the construction sector is in line with the construction of several government projects (Japek Sisi Selatan II Toll Road and various dams).

"Apart from that, the performance of the construction sector is also supported by private projects that are still ongoing to meet year-end targets," he said.

On the other hand, increasing community mobility driven by tourism activities has a positive impact on improving the performance of the transportation & warehousing sector as well as the food & drink accommodation provision sector.

This is confirmed by the growth in airplane passengers (Husein Sastranegara & Kertajati Airport) which was recorded at 57% (yoy), an increase from the previous quarter (32.5% yoy).

Apart from that, West Java's Room Occupancy Rate (TPK) was 42.83% in the third quarter of 2023, higher than the second quarter of 2023 (38.98%).

"This also has an impact on retail sales which drives the performance of the wholesale and retail trade sectors in West Java," he explained.

He assessed that in 2023, West Java's economy is expected to continue to grow positively in the range of 4.7-5.5% (yoy).

"This optimism is supported by strengthening domestic demand, where people's mobility in 2023 will be higher than the previous year, as well as the momentum of the political safari which has started in the third quarter of 2023," he explained.

In the future, synergy and collaboration need to continue to be strengthened, especially alignment of work programs with all stakeholders.

According to him, various efforts need to continue to be made to increase domestic economic resilience, including through optimizing the realization of regional spending, encouraging investment promotion, encouraging the acceleration and expansion of digitalization.

"Also ensuring the wheels of the economy run smoothly through holding various events/exhibitions to support MSMEs, as well as continuing to encourage the optimization of connectivity infrastructure to increase economic equality in West Java," he said.

(SOURCE)