Indonesian growth slowed more than expected in the first quarter, official data showed yesterday, as weak exports and tight monetary policy weighed on Southeast Asia’s top economy.
Growth in the archipelago nation has been easing over the past year as Chinese demand for key commodities slows, foreign investors are put off by policies perceived as nationalistic and interest rate hikes curb lending.
Year-on-year growth slipped to 5.21 percent in the three months to the end of March, down from 5.72 percent on-year expansion in the fourth quarter of last year, the official statistics agency said.
Economists had forecast growth of 5.60 percent.
Growth for last year came in below 6 percent for the first time in four years and analysts said the latest lackluster data indicated a pick-up was unlikely.
“We think that tight monetary policy, along with weak demand for commodity exports, will prevent a bounce back to the six percent-plus growth rates that not long ago looked like the norm,” Capital Economics said in a note.
Indonesia hiked interest rates by 175 basis points last year to 7.5 percent after stocks and the rupiah plunged as speculation grew that the US was about to start winding back its stimulus program.
The move was credited with shoring up the economy, which has been more stable in recent months, but it appears to have hit growth, analysts said.
Foreign investment growth — while still at high rates globally — also slowed by more than half to around 10 percent in the first quarter of this year, according to data released last month.
Overseas businesses have been put off due to policies perceived as nationalistic such as a ban on the export of some unprocessed minerals, analysts said.
Exports fell 0.78 percent in the first quarter, while imports fell 0.66 percent, according to the statistics agency.
However, household consumption remained robust, growing at 5.61 percent as politicians spent on social projects ahead of elections last month, the agency said.
Inflation has moderated and the rupiah has become Asia’s top performing currency this year from being its worst last year. It is up 5.7 percent against the US dollar so far this year.
Additional reporting by Reuters
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