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ndonesia must increase government spending on infrastructure and provide more fiscal incentives to spur economic growth, which fell to its lowest level since 2009 in the first quarter (Q1) this year, analysts say.

Glenn Maguire, ANZ chief economist for South Asia, ASEAN and Pacific regions, said Tuesday that government spending should be '€œactivated efficiently'€ to spur economic growth in the second half of the year.

'€œThe government has already announced it will fast-track some infrastructure spending from May, but any degree of slippage here will confirm our risk scenario that the second quarter could be weaker than the first one,'€ Maguire said.

Indonesia saw growth in its gross domestic product (GDP) fall to 4.71 percent in the first quarter, lower than the 5.01 percent expansion recorded in the previous period. It is the slowest growth rate recorded since the third quarter of 2009, as an increase in investment was unable to offset a further decline in exports and a slowdown in government spending.

On a quarter-on-quarter basis, the economy shrank 0.18 percent, following a 2.06 percent contraction in the previous quarter. The quarterly contraction in the first three months was led by a 49 percent drop in government spending, while exports dropped 6 percent, Central Statistics Agency (BPS) data show.

Bank Central Asia (BCA) economist David Sumual said the GDP figure in the first quarter was slightly below his team'€™s prediction of 4.8 percent, which was the lowest of all estimates surveyed previously by Bloomberg, due to the bleak outlook for global commodity prices.

David said the weak growth had been expected due to the decline in various economic sectors, such as retail, services and manufacturing. Low realized foreign and domestic investments, as well as weak government spending, made the situation worse, he added.

According to David, weak government spending is expected to continue until at least the end of the second quarter, despite the seasonal effects of Ramadhan and Idul Fitri in June and July, which could help boost domestic demand.

As part of his effort to boost growth by 7 percent within his five-year presidential term, President Joko '€œJokowi'€ Widodo has increased capital expenditure for infrastructure projects to Rp 276 trillion ($21.17 billion), almost twice the Rp 156.4 trillion allocated in the original budget.

First-quarter state spending of Rp 367 trillion, although higher than last year, was dominated by spending on civil servant salaries and other fixed costs. Spending on infrastructure projects, on the other hand, remained below the targeted level.

BPS deputy of accounts and data analysis Kecuk Suhariyanto confirmed that construction on more infrastructure projects would begin soon, which could help spur growth, as investments from government and the private sector currently accounted for 32 percent of GDP.

BI spokesperson Tirta Segara said first quarter GDP growth was in line with several indicators monitored by the central bank over the last few months. Tirta said BI remained confident government spending would act as a stimulus for the economy starting in the second quarter.

However, Tirta added, the central bank maintained its view that economic growth would lean toward the lower end of the 5.4-5.8 percent range by year'€™s end, depending on the realization of government programs.

'€œWe continue to expect BI to reduce its policy rate once more, most likely in June, after the release of the first quarter balance of payments data on May 20. However, a risk to our view of a cut in the second quarter would come from a potential increase in pressure on the rupiah,'€ Barclays economists Wai Ho Leong and Angela Hsieh wrote in a research note after the GDP announcement.