JAKARTA (TheInsiderStories) - Indonesia’s gross domestic product (GDP) growth slowed down further to 4.67 percent in second quarter (Q2) of 2015, the lowest since 2009, compared to a growth of 4.72 percent recorded in January-March period, the Central Statistic Bureau reveals. While Central Bank remains upbeat that the country’s economy can still expand to above 5 percent this year.
After consistently growing above 6 percent quarterly since 2010, Indonesia’s economic growth fell below the level since the second quarter of 2013 and ended to 5.02 percent in 2014. The economic growth then landed at lower level in H1 2015.
The Head of BPS Suryamin said the main driver of the slower economy was commodity and energy exports which remained, coupled with weak government’s contribution to GDP, which failed to show much improvement in the period. Finance Minister Bambang Brodjonegoro said the government spent around 45 percent of its State Budget worth Rp900 trillion until June.
On Tuesday, the central bank governor Agus Martowardojo sees Indonesia economy better than other developing countries such as Brazil, India and South Africa. He believes domestic economy will still improve in second semester, driven by government spending.
“It (slow down) is due to worries over weakening U.S economy. Once The Fed makes a clear policy, then we can take a clear position,” he said.
Dian Ayu Yustina, economist and bond analyst at Treasury and Capital Market Division of PT Bank Danamon Indonesia Tbk, said it will be hard to achieve the government’s growth target this year of 5.2 percent in this current situation. She added the growth in the second half will depend on the pace of the government spending, particularly the infrastructure projects.
“We may expect some impact of the macro (and micro) prudential loosening done by BI and OJK to have impact, particularly on the credit growth,” Dian said.
Therefore, she added, the consumers’ purchasing power needs to be supported which can be done by improving the management of inflation. Coordination between ministries needs to be strengthened to curb the potential negative impact of the El Nino phenomena in the second half.
Bank Danamon still maintains full year growth forecast at 4.96 percent, though with downside risks as Indonesia still faces rising external uncertainties. “We are still expecting BI Rate to be lowered down by 25 basis points (bps) to 7.25 percent by end of the year.” (*)
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