Indonesia: Growth ticks up in Q4
The economy ended 2017 on a healthy note, with growth accelerating for a second consecutive period in the fourth quarter. GDP expanded 5.2% over the same period of 2016, just above Q3’s 5.1% increase. The result met FocusEconomics analysts’ expectations and marked the best reading since Q2 2016. For the full year 2017, GDP grew 5.1%, up marginally from 5.0% in 2016 and the fastest growth since 2013.
The fourth quarter’s acceleration came on the back of robust fixed investment growth and increased government spending. Fixed investment expanded 7.3% annually, the best result since Q1 2013. Investment in the construction sector grew notably in the quarter, likely supported by several government infrastructure projects in the pipeline, as well as improvements in the business climate. Public consumption growth edged up from 3.5% year-on-year in Q3 to 3.8% in Q4, following a weak start to the year. Meanwhile, household spending was broadly unchanged, growing a healthy 5.0% annually (Q3: +4.9% year-on-year).
Despite higher commodity prices, the external sector subtracted from growth, amid soaring imports. Imports rose 11.8% annually in the fourth quarter, reflecting buoyant domestic demand and investment growth in particular. Meanwhile, export growth slowed from Q3’s 17.0% yoy to 8.5% in Q4.
Overall Indonesia’s economic growth trajectory remains on a solid, and slowly accelerating, path. Growth should kick into a higher gear this year, boosted by infrastructure projects, the election cycle and rising commodities prices.