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Economic growth seen to miss govt target
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Illustration.(Kompas/Iwan Setiyawan) (Kompas/Iwan Setiyawan)
Illustration.(Kompas/Iwan Setiyawan)
Indonesia's economy is expected to grow by less than 5 percent this year, far from the 5.7 percent target stated in the 2015 state budget. Under current circumstances, it would be difficult to achieve even a 5 percent growth rate in 2015, an economist has said.
Firmanzah from Paramadina University in Jakarta expects the country's economy to grow by only 4.75 to 4.8 percent this year. Recent data from the Central Statistics Agency (BPS) showed annual economic growth of 4.73% in the third quarter (Q3) of 2015.
"From the beginning of 2015 to the end of the third quarter, the growth rate was below 5 percent. There will be slim grow in the last quarter of 2015, possibility at 4.75 percent or 4.8 percent," said Firmanzah in Jakarta on weekend.
The gross domestic product (GDP) growth rate for Q3 marks a slight improvement over the previous quarter (Q2), when the year-on-year (yoy) rate stood at 4.67 percent. The improvement was driven by government spending and household consumption.
Government spending rose 6.56 percent (yoy) in Q3, up from 2.28 percent in the previous quarter. Household consumption ' which contributes 55 percent to the overall economy ' fell marginally, to 4.96 percent (yoy) in Q3 from 4.97 percent in Q2.
Meanwhile, investment spending grew by 4.62 percent (yoy), up from a rate of 3.55 percent in Q2.
Firmanzah expressed concern about the increase in unemployment. The number of unemployed people nationwide reached 7.56 million in August 2015, an increase of 320.000 from a year earlier.
"Judging from this indicator, the government should be more focused on poverty alleviation and boosting the labor-intensive industries," he added.
According to BPS director of population and employment statistics Razali Silitonga, the increased unemployment figure was caused by both layoffs and a decrease in employment absorption due to the economic slowdown.
"The number of new entrants to the labor market was not fully absorbed, while on the other side there were layoffs, as well," said Razali.
Vice President Jusuf Kalla blamed the sluggish global economy for Indonesia's failure to achieve the government's GDP growth target, noting that deteriorating global demand had caused the price of Indonesian commodities, such as crude palm oil and coal, to plummet.
In a bid to reduce the trade deficit, the government had managed to curtail imports of goods like food, rice, corn, soybeans and industrial goods. The economic policy packages released recently, Jusuf said, aimed to provide incentives to boost local production and thereby help meet domestic needs.
"It [the import of goods] must be reduced by producing more locally, given our big domestic market. So what can be improved? [We can improve production of] the agricultural products that we used to import, such as corn, soybeans and sugar," said Kalla, as quoted by kompas.com.
In the first nine months of 2015, Indonesian exports contracted 13.3 percent (yoy) to US$ 115.1 billion, while imports fell at a faster rate of 19.7 percent to US$ 107.9 billion. (ags)(+)
