Indonesia: GDP growth grows at slowest pace in nearly five years in Q1
May 5, 2014
In the first quarter, GDP grew 5.2% over the same quarter last year. The expansion was below the 5.7% increase observed in the fourth quarter and marked the weakest growth rate since Q3 2009. The result undershot market expectations of a 5.6% rise.
The slowdown in Q1 primarily reflected the impact of a mineral export ban that the government introduced in January in an attempt to promote the development of a domestic processing industry. Exports plummeted from 7.4% growth in Q4 to a 0.8% decline in Q1. Imports contracted 0.6% in Q1 (Q4: -0.6% year-on-year). As a result, the external sector's net contribution to overall growth dropped from plus 3.3 percentage points in the fourth quarter to a flat reading in the first quarter.
On the domestic side, total consumption growth was fairly steady at 5.4% (Q4: +5.5% year-on-year). Private consumption growth increased from 5.3% in Q4 to 5.6% in Q1, while government consumption fell from a 6.5% expansion in Q4 to an increase of 3.6% in Q1. Meanwhile, fixed investment growth improved from 4.3% to 5.1%.
The Central Bank expects the economy to expand between 5.5% and 5.9% in 2014. FocusEconomics Consensus Forecast panelists expect the economy to expand 5.5% in 2014, which is unchanged from last month's forecast. For 2015, the panel sees economic growth at 5.8%.
Author: Carl Kelly, Economist