(Photo: The Insider Stories)

JAKARTA (TheInsiderStories) – Indonesia’s economy is predicted to grow 5.2 per cent in the first quarter of this year from the same period last year, Finance Minister Sri Mulyani said on Tuesday (17/04).

This projection is higher than the 5.1 percent growth in the first quarter last year.

Mulyani said economic growth improvement was notable from improving tax revenue collection in the quarter. She said collection was up to 16.21 per cent from the same period last year, without taking into account from collections from the tax amnesty.

The realization of tax revenue up to March 31, 2018 has reached Rp262,4 trillion (US$ 19 billion) or 16.2 percent of the total target state budget of Rp1.618, 1 trillion ($122 billion). In the same period of 2017, the realization of tax revenue only recorded Rp237.9 trillion ($17.2 billion).

(Infographic: The Insider Stories)

The rise of global commodity prices also spur optimism on nation’s trade activities in past three months.

However, the current account deficit of Indonesia (which is the widest measure for trade) is expected to widen to 2 percent of gross domestic product (GDP) in Q1-2018 as imports have been better than a year ago.

Moreover, the recent surge in raw material imports is caused by rising demand from the manufacturing sector. This should be a good development as an expanding manufacturing industry boosts overall economic growth. For the long term, however, Indonesia should reduce its dependence on imports because this would cause a structural improvement for the nation’s current account deficit.

Meanwhile the central bank has projected the biggest economy in Southeast Asia will reach 5.11 per cent in line with improving economic conditions since the beginning of the year. The projected growth in Q1 / 2018 is still within the Bank Indonesia’s forecast for overall economic growth of 5.1 percent to 5.5 percent.

Bank Indonesia kept its policy rate unchanged in a policy meeting this month, saying its stance was sufficient to support the economy. BI’s outlook for 2018 economic growth is 5.1-5.5 per cent.

Indonesian retail sales grew 1.5 percent in February from a year earlier, supported by sales of clothing, a central bank survey showed on Monday. Retail sales in January were down 1.8 percent, the first contraction since July of last year. The survey of 700 retailers in 10 major cities projected that March retail sales would rise by 1.7 percent on an annual basis, also on account of apparel sales.

Written by Elisa Valenta, email: elisa.valenta@theinsiderstories.com