Indonesia GDP

Indonesia

Indonesia: GDP growth stable in Q2 at multi-year low

August 5, 2015

In the second quarter, GDP grew 4.7% over the same quarter of the previous year. The expansion matched the result tallied in the first quarter, which marked the weakest result since Q3 2009. GDP growth rates have been on a fairly steady downward trend since the close of 2010. The Q2 result overshot market expectations of a 4.5% rise and reflects that steady growth in private consumption and an improvement in the external sector offset declines in investment and government spending. President Joko Widodo’s plans for revitalizing the economy by fostering investment and boosting public spending have yet to materialize.

On the domestic side of the economy, total consumption increased 4.6% in Q2 (Q1: +4.8% year-on-year). Private consumption growth increased 5.0% in Q2for the third consecutive period. Government consumption dropped from a 2.7% expansion in Q1 to a 2.3% increase in Q2, reflecting ongoing delays in starting important infrastructure projects. Meanwhile, fixed investment growth declined from 4.3% in Q1 to 3.6% in Q2.

The external sector continued to suffer the effects of sluggish global demand and falling commodity prices. Exports contracted 0.1% in Q2, although this decline was less pronounced than the 0.9% drop registered in Q1. Imports tumbled to a 6.9% decrease in Q2 (Q1: +2.3% yoy). As a result, the external sector’s net contribution to overall growth improved from 0.4 percentage points in the first quarter to 1.6 percentage points in the second quarter.

The Central Bank expects the economy to expand between 5.0% and 5.4% in 2015. FocusEconomics Consensus Forecast panelists expect the economy to expand 4.9% in 2015, which is down 0.1 percentage points from last month’s forecast. For 2016, the panel sees economic growth at 5.4%.


Author:, Economist

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Indonesia GDP Q2 2015

Note: Year-on-year changes of GDP in %.
Source: Statistics Indonesia (BPS) and FocusEconomics Consensus Forecast.


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