Gross Domestic Product: Slow Process of Accelerating Economic Growth on Track
In early November 2018 the Central Statistics Bureau (BPS) announced that Indonesia’s gross domestic product (GDP) growth reached 5.17 percent year-on-year (y/y) in the third quarter of 2018. Although it means a slowdown from the 5.27 percent (y/y) growth pace in the preceding quarter, the Q3-2018 GDP growth rate actually slightly exceeded our expectations.
After all, as we have noted before, the Q2-2018 GDP growth rate should be regarded an anomaly that was caused by sharply rising central government spending through the village funds (which is not a structural factor and therefore we assumed that the strong GDP growth rate in Q2-2018 was not sustainable in the remainder of the year).
The 5.17 percent (y/y) growth pace in the third quarter of 2018 was in fact the best Q3 GDP growth figure since 2013, meaning Indonesia’s slow process of accelerating economic growth – which was started in 2015 - is still on track. We therefore decided not to revise our GDP growth outlook for Indonesia in full-year 2018 (which we had set at 5.2 percent y/y). Considering in the past nine years, it occurred seven times that Indonesia’s Q4 growth exceeded Q3 growth, we would surely bet on slightly higher growth in the last quarter of the year (in the range of 5.20 – 5.25 percent y/y), especially because the incumbent government is eager to boost economic growth ahead of the 2019 elections (in a bid to attract more votes).
However, it also means that it is basically impossible to achieve the government’s 5.4 percent (y/y) growth target that was set in the 2018 State Budget. Finance Minister Sri Mulyani Indrawati had recently already revised her projection for full-year 2018 economic growth to 5.14 percent (y/y).
This articles discusses:
• economic growth of Indonesia in Q3-2018
• special focus on household consumption and Indonesia's export performance
• our forecast for Indonesia's economic growth in the remainder of 2018 and in 2019
Read the full article in the November 2018 edition of our monthly research report magazine. You can purchase this report by sending an email to firstname.lastname@example.org or a WhatsApp message to the following number: +62(0)8788.410.6944
Poll Indonesia Investments:
What do you think will be the growth rate of the Indonesian economy in full-year 2018?
Voting possible: -
- 5.1% (or lower) (44.7%)
- 5.2% (21.6%)
- 5.3% (or higher) (20.7%)
- No opinion (12.9%)
Total amount of votes: 564