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Jakarta Post

Economic growth in 2018 stagnant at 5%: Economists

  • News Desk

    The Jakarta Post

Jakarta   /   Thu, November 23, 2017   /   12:25 pm
Economic growth in 2018 stagnant at 5%: Economists University of Indonesia economist Faisal Basri (The Jakarta Post/vny)

Several economists have expressed their doubt that the target of 5.4 percent economic growth as stipulated in the 2018 state budget could be achieved, after weak growth of only 5.03 percent in the third quarter of 2017.

“It may be about the same as this years growth,” said Faisal Basri, an economist with the University of Indonesia on the sidelines of the 2018 Political Economy Outlook organized by the Institute for Development Economics and Finance (INDEF) in Jakarta on Wednesday as reported by kontan.co.

He explained the economy would grow by around 5 percent next year, as household spending, which contribute 50 percent of gross domestic product (GDP), would remain weak.

People prefer to save their money and await better political conditions in the country, he said, adding that as a result, corporations would be reluctant to invest and expand their businesses.

Faisal said the way to boost economic growth would be through government spending, but it would face difficulty because of limited tax revenues and little room to add to debt.   

A similar pessimistic outlook was expressed by INDEF’s senior economic researcher Didik J Rachbini. “Along the second and third quarters, there was no indication of significant recovery. In fact, accelerated [growth] was expected to happen [in those periods],” Didik added.

He still hoped, however, that manufactured exports would be able to boost growth as the products contributed 1.02 percent to GDP in the third quarter, compared to a 0.75 percent in the previous quarter.  (bbn)