Although the growth rate has remained subdued – and fell below many analysts’ estimates – it is still in line with our forecast. We have emphasized repeatedly over the past couple of years that the acceleration of Indonesia’s economic growth goes at a very slow pace, particularly amid challenging external conditions (most notably: subdued global growth and the USA-China tariff war). Hence, we cannot expect any big jumps in Indonesia’s economic growth.

And while many point at slowing economic growth for Southeast Asia’s largest economy in the first quarter of 2019 - as they compare the latest Q1-2019 GDP data to the preceding quarter (namely Q4-2018 when Indonesia posted an economic growth rate of 5.18 percent y/y) - we prefer to compare the Q1-2019 data to Q1-2018 in order to avoid major ‘seasonal abnormalities’ that often occur when data is examined on a quarter-on-quarter basis.

Compared to Q1-2018 economic growth of Indonesia continued to accelerate in Q1-2019, albeit at a very modest pace (from 5.06 percent y/y to 5.07 percent y/y, see table below).

Indonesia's Quarterly GDP Growth 2009–2018 (annual % change):

Year Quarter I
Quarter II Quarter III Quarter IV
2019     5.07
2018     5.06     5.27      5.17      5.18
2017     5.01     5.01      5.06      5.19
2016     4.92     5.19      5.01      4.94
2015     4.71     4.66      4.74      5.04
2014     5.14     5.03      4.92      5.01

Source: Statistics Indonesia (BPS)

However, we do have to add that not all conditions were the same in the first quarters of 2019 and 2018. In the first quarter of 2019 campaigning in the context of Indonesia’s legislative and presidential elections (which were held on 17 April 2019) reached its peak, a period when there traditionally occurs a boost in the money circulation. This boost not only stems from the rise in gatherings and events that are organized in the context of the elections (and cause a rise in consumption of, for example, food and drinks) but also through vote-buying. In Indonesia it is common for political parties and candidates to spend heavily ahead of the elections – both in the form of merchandise and gifts - in order to encourage people to vote for a specific party or candidate.

This article discusses the following:

Indonesia's economic growth in Q1-2019
The impact of the elections on the economy (including generous social assistance spending by the incumbent as well as 'political clientelism')
The challenging external environment that drags down Indonesian exports
Standard & Poor's recent rating upgrade
The impact of the Ramadan and Lebaran festivities on economic growth, especially in the regions

Read the full article in the May 2019 edition of our monthly research report. You can purchase the report by sending an email to or a WhatsApp message to the following number: +62(0)8788.410.6944

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