Indonesia’s Economic Shrank at 0.52% in 1Q 2019
Chief of Indonesian Statistics Suhariyanto.

JAKARTA (TheInsiderStories) – Indonesia’ annual economic growth eased slightly to 5.05 percent in the second quarter (2Q) of 2019 from 5.07 percent in the previous three-month period and slow compared to the same period last year, 5.27 percent. This was the weakest GDP growth since the 2Q of 2017, Statistics Indonesia has reported on Monday (08/5).

Considering the first half of the year, the economy expanded 5.06 percent from a year earlier. For 2019, the government is targeting economic growth at 5.2 percent, while the central bank has forecast a range of 5.0-5.4 percent.

Head of Statistics Agency Suhariyanto revealed GDP based on constant prices in the 2Q of this year was Rp2,735 trillion (US$195.35 million), higher than the same period last year of Rp2,603 trillion. On the basis of gross prices, GDP in the 2Q of 2019 was Rp3,963 trillion.

“Cumulatively, Indonesia’s economic growth in the first quarter to the second quarter of 2019 compared to the first quarter of the year to 2018 grew 5.06 percent,” he said in a press conference in Jakarta.

However, quarterly, the economy expanded 4.2 percent quarter-on-quarter (q-to-q) in the three months to June 2019, rebounding sharply from a 0.52 percent contraction in the previous period. This was the first quarterly growth in three quarters and the strongest in a year.

From the production side, growth was driven by almost all business fields, where the highest growth was achieved by Other Service Business Fields which grew 10.73 percent. However, because its portion of GDP is only around 1.92 percent, its contribution does not significantly boost economic growth.

Meanwhile, the portion of the manufacturing sector is still dominant against GDP with a value of 19.52 percent. Nevertheless, the growth was only recorded 3.54 percent, slowing from the same period last year 3.88 percent.

If specified in more detail, the coal industry and oil and gas processing fell 0.25 percent. Suhariyanto explained the price of Indonesian crude oil in the 2Q of 2019 fell 6.12 percent compared to the same period last year. The decline also occurred in coal prices which dropped 22.9 percent and palm oil which eroded 16.7 percent.

“Indonesia’s main exports are coal and crude palm oil so that the price reduction will affect export and import activities which are components of GDP growth,” he said.

Meanwhile, the non-oil and gas industry rose 3.98 percent mainly supported by the textile and apparel industry which shot 20.71 percent. The textile and apparel industry grew significantly supported by increased production in several textile and apparel production centers.

On the other hand, the rubber industry, rubber goods, and plastics fell due to falling foreign and domestic demand.

The spatial economic structure in 2Q 2019 was dominated by the provinces of Java and Sumatra. Java Island contributed 59.11 percent, Sumatra 21.31 and Kalimantan 8.01 percent. Meanwhile, the highest growth was achieved by the provincial group on Sulawesi Island at 6.76 percent (YoY).

Previously, economist coordinating minister Darmin Nasution predicted that economic growth in the 2Q of 2019 would only reach 5.2 percent. This projection is higher than the achievement of economic growth in the 1Q of 2019 at 5.07 percent but lower than the economic growth in the 2Q of 2018 of 5.27 percent.

According to Nasution, the decline in growth performance this year compared to last year was due to pressure from the global economic slowdown. This condition was strengthened by the revised global economic growth projection by international financial institutions.

The International Monetary Fund downgraded its projections from 3.3 percent in April to 3.2 percent in July. The same thing was done by the World Bank by cutting its projections by 0.3 percent from 2.9 percent to 2.6 percent.

US$1=Rp14.000

Written by Lexy Nantu, Email: lexy@theinsiderstories.com