Indonesia: GDP growth decelerates in Q1 to weakest level since 2009
May 5, 2015
In the first quarter, GDP grew 4.7% over the same quarter of the previous year. The expansion came in below the 5.0% expansion tallied in the fourth quarter of last year and marked the weakest result since Q3 2009. GDP growth rates have been on a fairly steady downward trend since the close of 2010. The Q1 result undershot market expectations of a 4.9% rise and reflects a slowdown in government spending and contracting exports. The poor result puts additional pressure on Joko Widodo, who took office in October with pledges to revitalize the economy.
On the domestic side of the economy, total consumption increased 4.7% in Q1 (Q4: +4.6% year-on-year). Private consumption growth stabilized at 5.0% in Q4. Government consumption dropped from a 2.8% expansion in Q4 to a 2.2% increase in Q1, reflecting Widodo’s struggle to start important infrastructure projects. Meanwhile, fixed investment growth ticked up from 4.3% in Q4 to 4.4% in Q1.
The external sector continued to suffer the effects of sluggish global demand. Exports contracted 0.5% in Q1, although this decline was less pronounced than the 4.5% drop registered in Q4. Imports tumbled to a 2.2% decrease in Q1 (Q4: +3.2% yoy). As a result, the external sector’s net contribution to overall growth swung from minus 2.0 percentage points in the fourth quarter to plus 0.4 percentage points in the first.
Author: Carl Kelly, Economist