Indonesia's Q4 GDP Growth Slows to 4.9%

Despite the global slowdown, the prospect of Indonesia’s economy remains positive.

Jakarta, 09 Jumadil Awwal 1438/06 February 2017 (MINA) – Indonesia’s gross domestic product in the fourth quarter of 2016 grew 4.94% from a year earlier, the Central Agency of Statistics (BPS) said on Monday, which was weaker than the previous quarter due to a slowdown in government spending.

The figure, which came in just below market expectations, reflects the challenges the government faces as it tries to tackle a budget deficit that is offsetting the windfall from a recover in commodity price, according to asia.nikkei.com.

Government spending fell 4.05% from a year earlier, a steeper fall than the 2.95% decline in the third quarter. This offset a revamp in exports, which reversed from a 5.65% decline in the third quarter to a 4.24% increase.

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Fixed capital formation, which represents investment in the private sector, also picked up to 4.8%.

Growth in household consumption, which accounts for more than half of GDP, was slightly lower at 4.99%.
Gradual pickup in private investment

The annual GDP growth rate clocked in at 5.0%, marking a moderate acceleration from the revised 4.9% growth in 2015, a six-year low. The natural resources-rich country has been struggling to find a driver of growth after the commodity boom ended.

President Joko Widodo’s flagship infrastructure development program has been progressing but has yet to boost economic activity. A chronic budget deficit prevents the government from ramping up spending on infrastructure projects.

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The 2017 budget targets GDP growth of 5.1% for the year. The government has focused on a realistic target after years of setting ambitious marks only to disappoint investors later.

The International Monetary Fund (IMF), which also expects 5.1% growth for the country, said the modest increase will be “led by a gradual pickup in private investment in response to stronger commodity prices, low interest rates and a recovery in external demand on the back of a pickup in global growth and trade.” (T/RS05/RS01)

Mi’raj Islamic News Agency (MINA)