The economy grew at a slower pace in the third quarter due to lower exports and adverse impacts of the prolonged rainy season — a “surprise” result that analysts consider not worrisome as fundamentals remain strong.
GDP grew 5.8 percent in the third quarter from a year earlier, after growing 6.19 percent in the previous quarter, the Central Statistics Agency (BPS) said Friday.
“We haven’t been able to experience benefits as much from the ongoing global economic recovery, resulting in weaker exports,” BPS deputy for statistics analysis Slamet Sutomo claimed.
The country’s GDP stood at Rp 1,654.5 trillion (US$185 billion) or up by 3.5 percent from Rp 1,574.8 trillion in the previous quarter. Cumulatively, GDP in the first nine months of this year reached Rp 4,727.6 trillion, a 5.9 percent growth compared to the same period last year.
“GDP growth in Q3 is below expectation. The fundamentals are still strong, nevertheless,” said Wellian Wiranto, Asian economist at the Hong Kong and Shanghai Banking Corporation (HSBC).
Wellian said that the “disappointing headline growth” was mainly weather-related. “The same culprit that pushed up prices a few months ago had also hurt growth — most evidently in the agricultural and mining sectors.”
Perry Warjiyo, director of monetary policy research at the nation’s central bank, agreed, saying that the slowdown of economy in the third quarter was not fundamental as it was based on seasonal issues.
“The downward trend in the third-quarter economic growth was mainly due to seasonal reasons. There had been climate issues,” Perry told reporters after Friday prayer at Bank Indonesia (BI) headquarters in Jakarta.
In fact, he added, BI was upbeat that the economy would expand 6.1 percent by year-end, as it sees
the nation’s economy to rebound in the last three months of this year, growing by 6.2 percent in the final quarter.
“Consumer confidence grew as second-quarter economic growth reached 6.2 percent and people’s income increased. Therefore, domestic consumption will continue to increase,” he said. “Beside, from the government expenditure side, there will be huge expansion in the fourth quarter.”
Both researchers agreed that, all in all, economic growth momentum was still robust.
Stocks responded positively to the GDP announcement, climbing up to a record close on Friday’s trading session. The benchmark Jakarta composite index (JCI) was closed up at 0.72 percent, or 26.26 percent, to 3,655.31, the highest in the country’s stock market history.
Domestic consumption, which benefited from slower inflation, grew by 2.01 percent on a quarter-to-quarter basis, in which food products grew by 1.53 percent and non-food products by 2.41 percent. Government consumption grew by 12.6 percent in the third quarter, especially for goods expenditures, which grew by 24.4 percent.
Investment grew by 7.03 percent in the third quarter, comprising a 4.27 percent growth for construction and building, 19.44 percent for equipment and machinery, and 21.96 percent for imported transportation equipment. Indonesia’s economy may grow more than 6 percent this year, Slamet said. Consumer confidence rose in October from September, with a central bank index measuring expectations climbing 4.4 points to 112, the highest level since August 2009. (est/ebf)
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