Indonesia posts fastest growth since 2013 in Q2

JAKARTA — Indonesia’s economy beat forecasts and grew the fastest in 4-1/2 years in April-June, helped by robust consumption during the Muslim fasting month, but headwinds cloud the outlook for lifting growth well above five per cent.

Southeast Asia’s largest economy grew 5.27 per cent from a year earlier in the second quarter, statistics bureau data showed on Monday.

This was Indonesia’s fastest pace since October-December 2013, and easily topped the first quarter’s 5.06 per cent and a Reuters poll projection of 5.16 per cent.

The latest number is the best since Joko Widodo, who pledged to get growth up to seven per cent, became president in 2014 and may give him a little boost as he seeks re-election in 2019.

But there are multiple factors making it unlikely Indonesia can keep seeing faster growth rates, starting with higher US interest rates — which have hit the rupiah currency — and possible collateral damage from the US-China trade war, which can hit Jakarta’s commodity exports.

Also, pivotal domestic consumption, which accounts for more than half of gross domestic product, will not be as strong as the second quarter, when it grew 5.14 per cent — the highest in four years - lifted by Ramadan and celebrations after it.

A survey released by the statistics bureau on Monday showed consumers were turning pessimistic in the third quarter due to weaker income projection.