Indonesia’s economic growth slipped to its weakest in more than two years, broadly meeting expectations, data showed on yesterday, signaling more monetary and fiscal stimulus is on the cards over coming months to spur demand knocked by a global slowdown.
GDP rose 5.02 percent in the three months that ended in September, from the year-ago quarter, the weakest pace since the second quarter of 2017, Statistics Indonesia reported.
The figure was close to the 5.01 percent growth expected in a Reuters poll and compared with the 5.05 percent expansion in the second quarter.
Though Indonesia — Southeast Asia’s largest economy — relies more on domestic demand, its growth has also been hurt by slowing global trade as the US-China tariff dispute shattered its exports. That in turn has dented consumer sentiment and overall domestic consumption.
Some economists said the data pointed to a need for further fiscal and monetary stimulus.
“We think policymakers will want to utilize all possible instruments at hand to support growth,” PT Bank Danamon economist Wisnu Wardana said, adding that all “productive engines” in the economy decelerated.
The fiscal policy imperatives would be under scrutiny given the central bank had already been cutting rates, he said.
Bank Indonesia has cut interest rates four times by a total of 100 basis points since July and is expected to ease again in coming months.
Australia and New Zealand Banking Group analysts said while the data backed its expectation of further monetary easing, GDP growth was likely to stay stuck at about 5 percent without a rebound in commodity prices or global growth.
In the third quarter, growth in household consumption, which makes up more than half of Indonesia’s GDP, eased slightly to 5 percent, from 5.2 percent.
Government spending and investment also slowed. Exports were flat, while imports plunged.
In August, Indonesian Minister of Finance Sri Mulyani Indrawati cut this year’s GDP growth outlook to 5.08 percent, compared with a target of 5.3 percent.
Indrawati on Monday said the fiscal deficit would be allowed to widen to 2 percent of GDP this year, up from 1.84 percent originally planned, due to revenue pressures.
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