Thu, Nov 07, 2013 - Page 15 News List

Indonesia Q3 growth weakest in nearly four years

Reuters, JAKARTA

People visit a shopping mall in Jakarta yesterday. Indonesian growth slipped to its slowest pace in nearly four years in the third quarter, official data showed yesterday, as recent turbulence weighed on Southeast Asia’s top economy.

Photo: AFP

Indonesia’s economy grew at its weakest pace in nearly four years in the third quarter, throttled by weak exports and slowing consumption as higher fuel prices bite.

Southeast Asia’s largest economy faces challenges from a widening current account deficit, which has made it a target of portfolio investors shifting funds out of emerging markets and knocked the rupiah to four-and-a-half-year lows.

The pressure on the rupiah has eased somewhat as the Federal Reserve delayed winding down monetary stimulus, but a renewed attack on Asia’s worst performing currency could resume with speculation over the timing of US tapering.

Weak exports hampered by a tentative global recovery make it harder for Indonesian policymakers to keep the country’s deficits at a sustainable level as growth slows, analysts say.

GDP in the July-to-September quarter grew 5.62 percent from a year earlier, in line with expectations and compared with 5.81 percent growth in April-to-June. A Reuters poll had projected growth of 5.6 percent from a year earlier and 2.93 percent against the previous quarter.

Bank Indonesia has a target of 5.5 to 5.9 percent growth for the full year.

The rupiah traded at 11,385 per US dollar after the announcement against 11,345 late on Tuesday.

Transport and communication was the strongest growing sector in the third quarter, expanding 10.46 percent from a year earlier, while agriculture, utilities and manufacturing saw weaker growth, the statistics bureau said.

Private consumption picked up in the third quarter, while government spending accelerated.

Indonesia, heavily relies on imported goods to meet domestic demand, posted a sizeable current-account deficit that hit 4.4 percent of GDP in the April-to-June period.

The rupiah has lost 15 percent so far this year as foreign investors dumped Indonesian assets on concerns over its ability to fund the economy and some of its economic policies.

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