INDONESIA’S 5.06PC GROWTH IN Q3 SLOWER THAN EXPECTED
Private consumption continues to flatline even as government spending picks up
INDONESIA’S economy grew slightly slower than expected in the third quarter, as private consumption continued to flatline, confounding efforts by policymakers to push the growth rate much above five per cent.
Southeast Asia’s largest economy expanded 5.06 per cent in July-September from a year earlier, said the statistics bureau yesterday, compared with 5.01 per cent in both the first and second quarters. A Reuters poll forecast 5.13 per cent for the third quarter.
Indonesia’s growth has stagnated at around five per cent since the fourth quarter of 2014 as private consumption, which accounts for about half of gross domestic product, has remained sluggish. Private consumption grew 4.93 per cent in the third quarter from a year earlier, a fraction below the second quarter’s 4.95 per cent pace.
“Consumption remained flat... Although BI (Bank Indonesia) recently has cut its key rate twice, it will take time to have an impact,” said Josua Pardede, an economist at Bank Permata, here.
On a positive note, government spending grew 3.46 per cent in the third quarter, picking up pace after a near two per cent annual contraction in April-June.
Investment also took on a bigger role in growth and rose 7.11 per cent, up from 5.35 per cent in the second quarter, including US$8.3 billion (RM35.19 billion) of foreign direct investment focused on metals, machinery, electronics and mining.
In a bid to spark more lending and growth, BI has cut its benchmark interest rate eight times — by a total of two percentage points — since the start of last year. Inflation, often a problem in Indonesia, has been low this year — giving BI room to make rates cuts.
So far, however, this has not spurred more activity. In September, bank lending expanded 7.86 per cent from a year earlier, below BI’s target of 10 per cent this year. Reuters