The central bank of Indonesia (Bank Indonesia) expects Indonesia's economic growth to slow to 5.77 percent (year-on-year) in the first quarter of 2014. However, despite this further slowing trend, the institution is content with recent macroeconomic developments: external demand is growing, while domestic demand is moderating, thus impacting positively on the country's current account deficit as well as inflation. Household consumption is expected to have grown in Q1-2014 due to the holding of legislative elections on 9 April 2014.
Director of the Communication Department at Bank Indonesia Tirta Segara said that Indonesian exports are improving, particularly manufactured exports, in line with improving conditions in advanced economies. Private investment in the first quarter of 2014 grew slightly but is expected to grow more markedly in the second quarter. Previously, the institution had already stated that its target range for economic growth is between 5.5 and 5.9 percent.
Foreign capital inflows continued in March 2014, accumulating to USD $5.8 billion in the first quarter of 2014. However, as the result of the legislative election on Wednesday (09/04) was a disappointment in the eyes of most foreign investors who hoped for a clear victory for the PDI-P (paving the way for Joko Widodo as next Indonesian president), some capital outflows can be expected until there is more political certainty ahead of the presidential election on 9 July 2014.
Previously, Indonesia's Finance Minister Chatib Basri forecast a growth rate of between 5.7 and 5.8 percent for Q1-2014, similar to the growth pace that was recorded in the fourth quarter of 2013 (5.78 percent).
Indonesia's Quarterly GDP Growth 2009–2013 (annual % change):
|Year|| Quarter I
||Quarter II||Quarter III||Quarter IV|
Source: Statistics Indonesia (BPS)
Gross Domestic Product of Indonesia 2006-2013:
(in billion USD)
(annual percent change)
|GDP per Capita
Sources: World Bank, International Monetary Fund (IMF) and Statistics Indonesia (BPS)