In­done­sia's growth slows fur­ther in sec­ond quar­ter, 2015


In­done­sia's growth slid in the sec­ond quar­ter to lev­els un­seen since 2009, gov­ern­ment data showed on Wed­nes­day, high­light­ing the up­hill bat­tle for Pres­i­dent Joko Wi­dodo in ex­pand­ing South­east Asia's big­gest econ­omy.

The econ­omy grew at 4.67 per cent year-on-year in the three months to the end of June, from 4.72 per cent in the pre­vi­ous quar­ter, In­done­sia's sta­tis­tics agency said. First quar­ter growth was re­vised up from 4.71 per cent. OCBC Bank economist Wel­lian Wi­ranto told AFP the re­sult was "largely dis­ap­point­ing". "There's no en­gine to sup­port growth at this point," he said. "We see weak­ness across the board from house­hold spend­ing to gov­ern­ment spend­ing and also in­vest­ment ac­tiv­i­ties." The usual con­trib­u­tors to eco­nomic growth in In­done­sia such as man­u­fac­tur­ing, trade and min­ing slowed com­pared with the same pe­riod last year, the sta­tis­tics agency said.

Wi­dodo, elected in Oc­to­ber, had promised to boost gov­ern­ment spend­ing in a bid to kick-start growth in the lag­ging econ­omy, but the re­sults were not ev­i­dent in the sec­ond quar­ter fig­ures. The pres­i­dent won praise for re­mov­ing hefty, po­lit­i­cally sen­si­tive fuel sub­si­dies early in his term, promis­ing to use the funds to over­haul the coun­try's creak­ing in­fra­struc­ture. But ex­pen­di­ture on such projects has been slow, with bu­reau­cracy in the sprawl­ing ar­chi­pel­ago of 17,000 is­lands just one of the fac­tors blamed for hold­ing back the pres­i­dent's plan.

For­eign in­vestors have been re­luc­tant to in­ject funds into the coun­try, with some observers crit­i­cis­ing in­con­sis­tency in gov­ern­ment pol­icy for the lack of con­fi­dence.

Do­mes­tic con­sump­tion, once a key driver of eco­nomic growth in the na­tion of 250 mil­lion peo­ple, has also dipped when com­pared to the same quar­ter last year.

Wi­dodo has set a growth tar­get this year of 5.2 per cent but has been warned a slow­down in China and a dip in com­mod­ity prices - a large chunk of In­done­sia's ex­ports - could thwart this goal.

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