Indonesia’s economic growth slowed in the third quarter as government spending and exports fell, official data showed on Monday, dimming hopes that Southeast Asia’s top economy will hit its GDP target this year.
The economy expanded 5.02 percent year-on-year from July to September, slightly below forecasts and slower than a revised 5.19 percent in the second quarter, according to the statistics agency.
Government spending, which supported better-than-expected growth in the second quarter, slipped by three percent year-on-year while exports also fell heavily in the resource-rich economy.
Analysts forecast full-year growth in the G20 economy would likely come in below the government’s target of 5.2 percent, as Indonesia extends a steady years-long slowdown driven by falling demand for its commodities exports, particularly from powerhouse China.
“While we think the worst is over for the economy, a strong and sustained rebound is unlikely,” said Oliver Jones of Capital Economics.
“We think that growth in Indonesia is likely to remain stuck at its current level of five percent for the next few years.”
Still, Indonesian growth remains relatively high in global terms.
Official data showed that strong domestic consumption among the rapidly growing middle class in sectors such as health and education continues to provide support.
Statistics agency head Suhariyanto, who like many Indonesians goes by one name, played down the slowdown and said growth was “pretty good” given the dim global outlook.
“Of course there need to be a lot of efforts to increase it in future,” he added.
Authorities have been scrambling to boost growth, with the central bank slashing interest rates six times this year and President Joko Widodo announcing a series of economic stimulus packages.
But Widodo is still falling short of raising growth rates to seven percent a year, a pledge that helped propel him to the presidency two years ago.
© 2016 AFP