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Indonesian GDP growth slows further amid cooling investment, exports
Indonesia’s economic growth has slowed further in 2019 to a level unseen in more than two years as global economic uncertainty has spilled over to the country, adversely affecting investment and exports.
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Thick smog blankets the high-rise buildings in Jakarta's business district of the Jl. Sudirman area on Oct. 9. (JP/Dhoni Setiawan)
Indonesia’s economic growth has slowed further in 2019 to a level unseen in more than two years as global economic uncertainty has spilled over to the country, adversely affecting investment and exports.
The country’s gross domestic product (GDP) grew by 5.02 percent in this year’s third quarter compared to 5.17 percent recorded in the same period last year. The figure marks a slowdown from year-on-year (yoy) growth of 5.07 percent and 5.05 percent penciled in the first and second quarter of this year, respectively.
GDP growth in this year’s third quarter was the slowest since 5.01 percent recorded in the second quarter of 2017 and far below the target of 5.3 percent stipulated in the 2019 state budget.
Growth of household spending, which accounts for more than half of the GDP, stagnated at 5.01 percent yoy in the third quarter, while investment, which contributes about a third, saw a plunge in growth to 4.21 percent from 6.96 percent in the corresponding period last year.
“We have to make sure that growth can be spurred with investment, the fundamental factor for Indonesia to maintain its growth momentum above 5 percent without incurring vulnerabilities amid a very volatile global environment,” Finance Minister Sri Mulyani Indrawati said in August.
Investment Coordinating Board (BKPM) data show that, as of September, overall realized investment reached Rp 601.3 trillion (US$42.89 billion), a 12.3 percent increase from the equivalent period of last year. Domestic investment grew 17.3 percent to Rp 283.5 trillion, while foreign direct investment (FDI) rose 8.2 percent yoy to Rp 317.8 trillion.
The sluggish economic growth means President Joko “Jokowi” Widodo has failed to deliver on his promise to lift economic growth to 7 percent by the end of his first term in office in 2019. Government officials have blamed global economic uncertainty as an obstacle standing in the country’s way to achieve such a target.
