Indonesia’s economic growth held above 6 percent for an eighth quarter as domestic consumption and rising investment countered an export slump, reducing the need for the country’s central bank to cut interest rates.
GDP rose 6.17 percent in the three months ended on Sept. 30 from a year earlier, the Indonesian Central Bureau of Statistics said in Jakarta yesterday. That compares with a 6.37 percent gain reported previously for the second quarter and matched the median estimate of 16 economists surveyed by Bloomberg News.
Policymakers in Southeast Asia’s biggest economy have avoided adding to a February rate cut even as neighbors from Thailand to the Philippines extended monetary easing to counter faltering global growth. Indonesian President Susilo Bambang Yudhoyono has pledged to build more highways, airports and ports to improve infrastructure, and meet an average growth target of 6.6 percent by the end of his second term in 2014.
The rupiah eased 0.2 percent to 9,630 per US dollar. It has fallen more than 6 percent this year, the biggest decline among the 11 most-traded Asian currencies tracked by Bloomberg.
The rupiah’s decline this year has boosted import costs and helped push inflation to a 13-month high last month, reducing the scope for monetary easing.
“The rupiah’s weakness will likely deter near-term rate cuts,” Moody’s Analytics economist Fred Gibson said in Sydney before the report.
“Higher government spending over the last year has curbed the need for aggressive monetary stimulus measures, a trend that should persist unless global economic conditions deteriorate,” he added.
Indonesia’s exports fell 9.4 percent in September from a year earlier, a report showed last week, the sixth straight month of decline. Consumer prices climbed 4.61 percent last month from a year earlier.
Still, domestic investment in the third quarter climbed 33 percent and foreign direct investment advanced 22 percent from a year earlier, government data showed last month.
“Expansion remains robust as investment and domestic demand increased,” PT Bahana Securities economist Arga Samudro said before the report.