Indonesia GDP

Indonesia

Indonesia: GDP growth stagnates in Q3

November 5, 2015

In the third quarter, GDP grew 4.7% over the same quarter of the previous year. The expansion equaled the result tallied in the previous two quarters, matching the weakest result since Q3 2009. GDP growth had been on a fairly steady downward trend in recent years and now appears to be stuck at levels below 5.0%. The Q3 result undershot market expectations of a 4.8% rise and reflects that gains from a long-awaited acceleration in government spending were offset by ongoing weakness in the external sector and sub-optimal investment levels. There is hope that a series of stimulus measures introduced by President Joko Widodo’s government in September and October will kick in and boost the economy in the final quarter of the year, alongside further increases in government spending. However, bureaucratic inefficiencies continue to threaten the start of important infrastructure projects.

On the domestic side of the economy, total consumption increased 5.2% in Q3 (Q2: +4.6% year-on-year). Private consumption increased 5.0% in Q3 for the fourth consecutive period. Fixed investment increased from 3.7% in Q2 to 4.6% in Q3. Meanwhile, government consumption accelerated from a 2.1% expansion in Q2 to a 6.6% increase in Q3.

The external sector continued to suffer the effects of sluggish global demand and falling commodity prices. Exports contracted 0.7% in Q3, which followed the 0.1% drop registered in Q2 and marked the fourth consecutive decline. Imports fell 6.1% in Q3 (Q2: -7.0% yoy). As a result, the external sector’s net contribution to overall growth moderated from 1.6 percentage points in the second quarter to 1.3 percentage points in the third 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 Q3 2015

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


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