Indonesia’s economy expanded less than analysts estimated last quarter due to weak household spending and exports, underscoring the challenge for the government as it seeks to build infrastructure and lift business confidence.
GDP rose 4.73 percent year-on-year in the three months through September, the statistics bureau said yesterday.
That compared with 4.67 percent expansion the previous quarter, and was less than the median estimate of 4.8 percent growth in a Bloomberg survey of 23 economists.
“Although recent reforms may give some boost to confidence, the changes to the business environment will take time to have an effect on the real economy,” Capital Economics Ltd economist Gareth Leather said in a report. “With tight monetary policy and low commodity prices likely to remain a drag on the economy, we expect growth to remain stuck at around 4.5 to 5 percent over the next few years.”
The rupiah, Asia’s second-worst performing currency this year, was little changed after the GDP data, trading down 0.2 percent at 13,581 rupiah to US$1, at 1:08pm yesterday in Jakarta, prices from local banks show. The benchmark Jakarta stock index fell 0.4 percent.
On a quarterly basis, the economy expanded 3.21 percent, less than the 3.29 percent forecast and a slowdown from 3.78 percent in the second quarter.
“It appears there are signs of stabilization,” Indonesian Minister of Trade Tom Lembong said. “This is quite a positive.”
Indonesian Minister of Finance Bambang Brodjonegoro in September said that economic expansion of between 4.9 percent and 5 percent for this year was still achievable. That rate would be the slowest since the global financial crisis.
Household spending expanded 4.96 percent in the third quarter year-on-year, while the country’s unemployment rate rose to 6.18 percent in August from 5.94 percent in the same period last year. A slowdown in domestic consumption, which accounts for more than half of the economy, counteracted a 58.1 percent surge in government capital spending.
Total government spending quickened to rise 6.56 percent from a year earlier. After a slow start to the year, authorities have begun major infrastructure projects in recent months, from a Chinese-built dam and US$5 billion railway tender to drainage projects and road paving in villages.
However, weak demand for the country’s commodities such as coal and rules banning raw mineral exports have hurt the mining industry, which contracted 5.64 percent from a year earlier.
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