Indonesia Q2 GDP growth weakest in two years

JAKARTA: Indonesia’s economic growth rate remained around 5% in the second quarter and was the weakest in two years, highlighting the difficulties it faces accelerating GDP expansion amid global uncertainties.

Southeast Asia’s largest economy grew 5.05 per cent in April-june, a touch cooler than Januarymarch’s 5.07%, the statistics bureau said on Monday. The pace matched the forecast in a Reuters poll. During the quarter, President Joko Widodo was re-elected to a second five-year term in a hotly-contested election.

Widodo has been trying to lit growth well above 5 per cent, the pace Jakarta has seen since the end of the commodities boom, by investing in infrastructure and giving tax breaks to lit manufacturing.

However, with the country still reliant on natural resources, low commodity prices, bouts of global market turbulence and tepid investment levels have undercut efforts to lit growth.

Fakhrul Fulvian, an economist with Trimegah Sekuritas in Jakarta, called the second quarter pace “positive”, arguing that other emerging markets also have slowdowns. The rupiah and Jakarta’s stock index did not move much ater the announcement. The rupiah was down 0.5 per cent, while the equity benchmark was off 1.5 per cent at 0418 GMT Monday amid broader Asia weakness due to the escalating U.s.-china trade war.

Household consumption, which accounts for more than half of gross domestic product (GDP), expanded 5.2 per cent in April-june compared with 5.0 per cent the previous quarter.