GROWTH BEST IN 5 YEARS
Steady household spending raises 2018 GDP expansion to 5.17pc, a third year of a pick-up
INDONESIA, Southeast Asia’s largest economy, posted slightly faster-than-forecast growth in the OctoberDecember quarter and its fullyear 2018 expansion was the best in five years, supported by steady household spending.
Gross domestic product (GDP) in the final quarter of last year expanded 5.18 per cent from a year earlier, compared with 5.11 per cent forecast in a Reuters poll and the 5.17 per cent posted for July-September.
Full-year growth last year was 5.17 per cent, higher than the poll’s 5.15 per cent forecast and marking a third year of a pick-up after the pace dropped to 4.88 per cent in 2015.
The rupiah strengthened slightly after the data while the stock market remained steady.
While last year’s growth was the best since 2013, it was below the government’s 5.4 per cent target and the seven per cent Joko Widodo, also known as Jokowi, when campaigning for election as president in 2014, had pledged to reach.
Despite the better-than-expected data, statistics bureau chief Suhariyanto warned of economic risks this year.
“A lot of projections for our economy in 2019 have showed many challenges ... with our major trading partner seen growing more slowly,” said Suhariyanto.
The GDP data is the last before Indonesia’s general elections on April 17. Jokowi is seeking a second five-year term and faces the same opponent as in 2014 — former general Prabowo Subianto, who has accused the president of economic mismanagement.
Jokowi has built infrastructure across the archipelago and kept inflation low despite the rupiah plunging to a 20-year low, which was a reason household spending was steady in the fourth quarter. Household spending represents over half of Indonesia’s GDP.
Investment grew slightly slower in the fourth quarter versus the July-September quarter and foreign trade still provided negative contribution to GDP with imports again outweighing exports, the data showed.
Jakarta is working on a number of incentives to boost shipments. Eximbank has already been tasked to provide lenient export financing and the trade minister said he may scrap surveyor requirements for some exports.
The government’s target for growth this year is 5.3 per cent while the central bank sees 5.2 per cent. Both have been saying local demand would be the main driver of growth, followed by investment, while their outlook on exports stays bleak.