Indonesia GDP Q1 2017

Indonesia

Indonesia: Growth rises tepidly in Q1

May 5, 2017

Indonesia’s growth edged up in the first quarter of 2017, but the acceleration was disappointing overall. GDP expanded 5.0% over the same period of the previous year, only slightly above Q4 2016’s 4.9%. The result undershot FocusEconomics expectations of slightly stronger 5.1% growth. The mild uptick from Q4 was due to rebound in government consumption and stronger impetus from the external sector.

Government consumption rose 2.7%, the highest growth in nearly two years. Public spending had fallen at the end of 2016 due to financing constraints, but improved revenue streams should allow the government’s ambitious infrastructure plan to get back on track this year. Outside of public spending, the domestic economy was largely unchanged. Private consumption growth inched down from 5.0% to 4.9% in Q1 and fixed investment growth was stable at 4.8%.

The external sector’s contribution to growth picked up from 0.3 percentage points to 0.5 percentage points on the back of surging exports. Exports grew 8.0% in Q1, the best result since Q4 2013. A better external environment and higher commodities prices supported overseas sales, while import growth picked up more modestly to 5.0%.

GDP growth should accelerate slightly this year thanks to a stronger global economic backdrop and a strong rebound in public spending. FocusEconomics Consensus Forecast panelists expect private consumption to boost growth this year and see GDP expanding 5.2% in 2017, which is unchanged from last month’s forecast. For 2018, the panel sees economic growth at 5.4%.


Author: Angela Bouzanis, Senior Economist

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