16:25 | 11/11/2018 Global Economy
Indonesia’s economy has slowed down slightly in the third quarter of 2018, lower than the previous quarter’s growth due to capital outflows, weaker exports, and household spending.
|Indonesia’s economy has slowed down slightly in the third quarter of 2018, lower than the previous quarter’s growth - Source: Reuters|
Data released by the Statistics Indonesia (BPS) on November 5 showed that the country’s gross domestic product (GDP) during the July-September period expanded by 5.17 percent compared to the previous year’s period, slightly higher than the 5.15 percent expected in a Reuters’ poll. Meanwhile, the preceding April-June period had the fastest quarter growth rate since 2013.
The slowdown was largely due to softer household consumption in the third quarter and a negative contribution from foreign trade. Although the expansion was a notch faster than expected, economists warn the growth may weaken further.
Fakhrul Fulvian, chief economist of Jakarta-based Trimegah Securities, said that the growth of the global economy, and Indonesia in particular, will tend towards a slower pace in the near future due the impact of a weakening rupiah. He expects Indonesia’s GDP to grow 5.13 percent in 2018 and 5 percent in 2019.
The rupiah is down around 9 percent this year, making it the second worst performing currency among emerging Asian markets.
Though a weaker currency has not stoked inflation, Indonesia’s central bank has raised interest rates five times since May to slow capital outflows, in a measure analysts say could dampen domestic demand.
Alex Holmes, Capital Economics analyst for emerging Asia, also predicted that Indonesian growth will probably stay at around 5 percent over the next couple of years.
While the Indonesian Government’s official GDP growth target this year is 5.4 percent, Finance Minister Sri Mulyani Indrawati last month told parliament that the growth for 2018 was more likely to be 5.14 percent.