Reason for this downward revision is that government consumption remains bleak. Government spending is one of the pillars of support for macroeconomic growth. However, so far in Q1-2017 public spending has not lived up to expectation (a normal phenomenon at the year-start amid fiscal consolidation after closing fiscal year 2016).

Indonesia's export performance in the first quarter of 2017, on the other hand, is expected to improve in line with higher commodity prices such as coal and crude palm oil (CPO).

Martowardojo added that Bank Indonesia is still finalizing the revision for its Q1-2017 growth projection and will release a new figure (below 5.05 percent) soon. Meanwhile, regarding full-year 2017, Bank Indonesia still expects GDP growth to fall within the range of 5.0 - 5.4 percent (y/y).

Amalia Adininggar, Director for Macro Policies and Analysis at Indonesia's National Development Planning Agency'€™s (Bappenas), is optimistic growth will touch 5.3 - 5.5 percent (y/y) this year although there remain plenty of global challenges that can undermine this growth pace (for example looming higher US interest rates, Donald Trump's trade policies but also administered price adjustments in Indonesia that are expected to push inflation to about 4 percent y/y).

The Indonesian government is optimistic that in 2018 economic growth can touch slightly above 6 percent (y/y) supported by a more stable global economy and by Indonesia becoming host of the 2018 Asian Games and annual IMF meeting. These events could boost investment in Indonesia.

Indonesian Deputy Finance Minister Mardiasmo emphasized that tax revenue needs to be optimized in order to finance government spending. About 86 percent of government spending is financed through tax revenue collection.

Indonesia's Quarterly GDP Growth 2009-2016 (annual % change):

Year    Quarter I
   Quarter II    Quarter III    Quarter IV    Full-Year
2016        4.91        5.19         5.01         4.94         5.0
2015        4.73        4.66         4.74         5.04         4.9
2014        5.14        5.03         4.92         5.01         5.1
2013        6.03        5.81         5.62         5.72         5.6
2012        6.29        6.36         6.17         6.11         6.0
2011        6.45        6.52         6.49         6.50         6.4
2010        5.99        6.29         5.81         6.81         6.2
2009        4.60         4.37         4.31         4.58         4.6

Source: Statistics Indonesia (BPS)