Indonesia: GDP growth slows to lowest point in nearly four years
November 6, 2013
In the third quarter, GDP grew 5.6% over the same quarter last year. The figure came in just below the 5.8% increase observed in the second quarter, but was in line with market expectations. GDP growth has not been this low since Q4 of 2009.
The Q3 reading reflected that a deterioration in the external sector more than offset stronger domestic demand. Private consumption growth increased from 5.1% in Q2 to 5.5% in Q3. Government consumption surged from 2.2% in Q2 to 8.8% in Q3. Meanwhile, fixed investment remained at 4.5%.
Exports rose 5.3% in Q3 (Q2: +4.8% year-on-year). Imports were also up, increasing by 3.8% in the third quarter, which was significantly higher than the 0.5% growth tallied in the second quarter. With imports accelerating faster than exports, the external sector's net contribution to overall growth tumbled from 1.7 percentage points in the second quarter to 0.1 percentage points in the third.
The Central Bank expects the economy to expand between 5.8% and 6.2% in 2013 and between 6.4% and 6.8% in 2014. FocusEconomics Consensus Forecast panelists are less optimistic than the Central Bank and expect the economy to expand 5.7% in 2013, which is down 0.1 percentage points from last month's forecast. For 2014, the panel sees economic growth at 5.6%, which is down 0.2 percentage points from last month's projection.
Author: Carl Kelly, Economist