Bank Indonesia Comments on Slowing Economic Growth in Q2-2014

Indonesia's Quarterly GDP Growth 2009–2014 (annual % change):

Year	Quarter I	Quarter II	Quarter III	Quarter IV
2014	5.22	5.12
2013	6.03	5.89	5.62	5.78
2012	6.29	6.36	6.16	6.11
2011	6.45	6.52	6.49	6.50
2010	5.99	6.29	5.81	6.81
2009	4.60	4.37	4.31	4.58

^{Source: Statistics Indonesia (BPS)}

Gross Domestic Product of Indonesia 2006-2013:

	2006	2007	2008	2009	2010	2011	2012	2013
GDP (in billion USD)	285.9	364.6	432.1	510.2	539.4	706.6	846.8	878.0
GDP (annual percent change)	5.5	6.3	6.1	4.6	6.1	6.5	6.2	5.8
GDP per Capita (in USD)	1,643	1,923	2,244	2,345	3,010	3,540	3,592	-

^{Sources: World Bank, International Monetary Fund (IMF) and Statistics Indonesia (BPS)}

The slowing pace of economic growth in Indonesia was mainly due to the contraction of the country’s export growth, particularly the natural resources based commodities. Several mining export products were still stalled resulted from the recently implemented ban on exports of raw minerals (part of the Minerba Act), while exports of coal and crude palm oil (CPO) weakened amid sluggish demand.

Furthermore, economic growth in Southeast Asia’s largest economy contracted due to declining government spending as well as non-construction investment activities. The delay in distribution of social assistance funds (Bansos) led to a decline in spending of the government for the poorer communities. Meanwhile, the negative growth of non-construction investment was caused by continued contraction in overseas transportation equipment investment following the still weak performance of Indonesian mining exports.

Economic growth in the second quarter of 2014 was supported by strong household consumption, partly brought on by the legislative and presidential elections. For example, the food and beverage industry and also the paper industry experienced marked improvements. Construction investment also grew relatively well. Meanwhile, declining imports were the result of a moderation of domestic demand and thus helped to reduce external pressure amid the decline in exports.

Bank Indonesia believes that the deceleration of economic growth in Q2-2014 is in line with the measures that have been implemented by the central bank and Indonesian government to combat inflation as well as the country’s wide current account deficit.

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lugano | 07 August 2014 20:52

Well - I think the Indonesian economy does better with Joko Widodo as President..!