Indonesia: Economic growth below expectations in the third quarter
November 18, 2010
In the third quarter, gross domestic product (GDP) grew 5.8% over the same quarter last year. The reading fell short of Consensus Forecast panellists' expectations of a 6.1% increase and was below the 6.2% expansion registered in the previous quarter. Private consumption increased 5.2% year-on-year (Q2: +5.0% yoy) and investment added 8.9% (Q2: +7.9% yoy). The net contribution from the external sector to overall growth improved and grew from 0.2 percentage points in the second quarter to 1.3 percentage points in the third. At the sector level, the deceleration over the previous quarter was broad-based, with all sectors deteriorating with the exception of transport and communication. The slowdown compared to the second quarter was mostly due to the unusually severe rains this year, which had a negative impact on Indonesia's agriculture and mining sectors. Despite the slowdown in the third quarter, the Central Bank of Indonesia expects GDP growth to accelerate to 6.2% in the fourth quarter, which would bring full-year growth to 6.1%.