Indonesia in slight miss with 4.73% Q3 GDP growth

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The economy grew 4.76 percent in the second quarter.

The 4.73 per cent year-on-year growth in the three months to Sept 30 was marginally better than the previous quarter’s expansion of 4.67 per cent, but missed market expectations of 4.8 per cent, underscoring challenges to the Indonesian government’s efforts to get the economy up and running.

A version of this article appears in print on November 06, 2015 of The Himalayan Times.

Gareth Leather at Capital Economics expects growth to remain stuck at around 4.5-5 percent over the next few years, ad tight monetary policy and low commodity prices remain a drag on the economy.

Analysts were nonetheless cautiously optimistic that Indonesia’s economy, the largest in Southeast Asia, could ride the momentum into the final quarter of the year after a tough 12 months.

Increased government spending and the kick-starting of key infrastructure projects, coupled with a spike in the cement production, had helped carry things along in recent months, he added. Frank Sibarani, the head of the Indonesian Investment Co-ordinating Board (BKPM), told reporters that firms operating in the zones would be exempt from the negative investment list, which sets limits on foreign involvement in many sectors of the economy.

It was slightly weaker than the expected growth of 4.8 percent.

On the spending side, Indonesia’s economic growth was supported by nearly all components. The data left economists divided on whether it will cut the benchmark rate, at 7.50% since February, to boost growth. He has a 5.3 growth target for 2016. Bali and Nusa Tenggara recorded the highest growth at 11.75 percent compared to the previous quarter.

Widodo emphasized social programmes in his 2014 campaign and pledged to lift growth to an average 7% annually during his five-year term.

In an attempt to improve Indonesia’s investment climate and boost sagging growth, Widodo in September began rolling out stimulus measures.

“We hope there is more business coming because it’s slow right now”, said Marc Besserer, president director of PT Bonna Indonesia, which makes precast concrete pressure pipes for power stations, adding that government tenders took far too long.

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