Indonesia posts 5.1pc growth in 2017
JAKARTA: Indonesia’s economic growth picked up last year as the central bank repeatedly slashed interest rates, official data showed yesterday, but analysts warned that there was little hope of another bump this year.
Southeast Asia’s biggest economy expanded 5.1 per cent yearon-year in 2017, up from five per cent in 2016, while fourth-quarter (Q4) growth came in at 5.2 per cent, beating market expectations of 5.1 per cent, government figures showed.
“The breakdown of the Q4 figures showed a pick-up in private consumption, government spending and i nvestment growth, which more than offset a pullback in net exports,” said Gareth Leather, senior Asia economist at research house Capital Economics.
But he cautioned that Indonesia’s economy was not in the clear, with prices for key commodities palm oil and coal expected to be under pressure.
“We doubt the recovery has further to run,” said Leather in a report after the data were released.
“Credit growth remains very weak. Meanwhile, fiscal policy is unlikely to provide much of a boost to growth. Despite the promising outlook for global de- mand, export revenues are likely to be held back by low commodity prices,” he added.
President Joko Widodo came to power in 2014 on a pledge to boost annual growth to seven per cent annually but his government has struggled to rev up the commodities-driven economy.
In a bid to accelerate growth, the central bank repeatedly slashed rates — including an unexpected drop to 4.5 per cent from 4.75 per cent in August — and Joko announced a series of economic stimulus packages.
In December, Fitch Ratings raised Indonesia’s sovereign rating to its second-lowest investment grade, saying economic reforms meant the country could better weather external shocks.
It came after Standard & Poor’s raised Indonesia’s credit rating from junk status to investment grade.
Leather said Indonesia’s economic growth was likely to remain stuck around five per cent this year and next year. AFP