JAKARTA: Indonesia’s gross domestic product in the third quarter grew 4.95 percent from a year earlier, its slowest pace in a year, statistics bureau data showed on Tuesday, November 5, while household consumption showed slower growth.
The third-quarter result was slightly below the 5 percent annual growth expected by analysts polled by Reuters and compared with a 5.05 percent increase in the second quarter.
On a non-seasonally adjusted quarterly basis, GDP grew by 1.50 percent, compared to a forecast of 1.59 percent.
Household consumption, which accounts for about half of Indonesia’s GDP, grew 4.91 percent annually in the third quarter, compared with 4.93 percent growth in the previous quarter, amid slowing spending on goods such as clothing and housing, said Amalia Widyasanti, acting director of Statistics Indonesia, told reporters.
Investments increased by 5.15 percent year-on-year, the fastest pace in a year, supported by investments in the new capital and other infrastructure projects, she added. Government spending and exports also increased further.
“The third quarter growth figures met our expectations as investment growth and recovery in exports offset weak household consumption,” said Radhika Rao, economist at DBS Bank.
Full-year GDP growth is expected to be around 5 percent, said Airlangga Hartarto, the chief minister of economy.
“We will continue to support household consumption as well as investments,” Airlangga told reporters. “We hoped to be able to maintain economic growth until the end of the year.”
Existing government incentives, such as a tax break on some property sales, should support consumption, he said, adding that the government was also formulating policy to help labor-intensive industries. -work to avoid layoffs.
In September, Bank Indonesia cut rates to support the economy, then held steady in October as growing tensions in the Middle East renewed pressure on the rupiah.
The third quarter GDP figure supports DBS Bank’s forecast that the central bank is likely to cut rates further this quarter, assuming a stable rupee, Rao added.
The rupee closed 0.13 percent higher on Tuesday, rebounding from its lowest level since August hit earlier in the day.
