Indonesia Economic Growth Steady at 5.06%  in 3Q

Moody's Investor Services has affirmed the Baa3 issuer and senior unsecured ratings PT Pelabuhan Indonesia III (Pelindo III) and Baseline Credit Assessment (BCA) at ba1, but downgraded Pelindo II' rating from Baa2 to Baa3 and BCA also ba1 - Photo by Pelindo II

JAKARTA (TheInsiderStories) – Indonesia’s economic growth over the third quarter of 2017 reached 5.06 per cent or relatively steady compared to 5.01 per cent in the same period last year, supported by the household and government government spendings, Statistics Indonesia announced. Cumulative the economic growth for nine Months (9M) stood at 5.03 per cent.

In terms of expenditures, all components have shown positive growth. Government spending grew by 3.46 per cent, compared to negative 2.95 per cent in the same period of last year. Government spending in 3Q is 22.56 per cent higher than 2016’s 21 per cent.

Household spending remains the biggest engine of Indonesia’s GDP, with a total contribution of 55.68 per cent; GDP grew by 4.93 per cent or slower compared to the same quarter of 2016, when it grew by 5.01 per cent.

“Commodity price rose including coffee, tea, CPO, coal, iron ore, etc in the third quarter. Also, better GDP growth from trading partners also has a positive outcome to our GDP, like China which drives up our exports by 13.78 per cent, exports to US by 11.28 per cent as well as Singapore by 6.06 per cent,” said Suhariyanto, Head of Statistic Indonesia on Monday (5/11).

All household spending component growth is slow in 3Q 2017, for both food and non-food. Growth of food consumption reached 5.04 per cent, or slightly slow than the same period of last year, when it grew 5.24 per cent. Growth of non-food consumption was also slow, except for consumption in hotel and restaurants, and consumer shoes and footwear, thanks to Ramadhan.

Meanwhile, investment became the second-biggest contribution at around 31.87 per cent of GDP, growing by 7.11 per cent or faster than the same period of last year at 4.24 per cent.

Exports also grew 17.27 per cent, or much better than its performance in the second quarter of 2016, when it experienced negative growth of 2.73 per cent.

In terms of production, the biggest contributors to GDP, namely agriculture and trade sector also stalled in the second quarter of 2017. Manufacturing grew 4.84 per cent, higher than the same period of last year, when it was able to grow 4.52 per cent. Meanwhile the agriculture and trade sector grew by 2.92 per cent and 5.50 per cent, or slower compared to the second quarter of 2016, when it grew 3.03 per cent and 5.59 per cent, respectively.

The good news, however, is the information and communication sector, which remains with the highest growth at 9.35 per cent, followed by company service sector at 9.24 per cent.

In term of location, growth is still dominated by Java, which contributed 58.51 per cent and Sumatra, which contributed 21.54 per cent of total GDP. Java and Sumatra grew 5.51 per cent and 4.43 per cent, respectively. The island of Sulawesi posted the highest growth rate, at 6.69 per cent.

Written by Yosi Winosa, Email: yosi.winosa@theinsiderstories.com