The central bank of Indonesia (Bank Indonesia) expects the country's economic growth to come in the lower end of its 4.7-5.1 percent (y/y) gross domestic product (GDP) growth target range for full-year 2015. Bank Indonesia Governor Agus Martowardojo expects to see accelerated economic growth in the last quarter of the year (from the preceding quarter) due to increased government spending and investment. In the second quarter of 2015, Indonesia's economy expanded at the slowest pace in six years (+4.67 percent y/y), then accelerating to 4.73 percent (y/y) in the following quarter.
Governor Martowardojo said the economy will be supported by various large (government-led) infrastructure projects that have been kicked off in the second half of 2015, adding that government capital spending increased by 38.8 percent by October. Meanwhile, household consumption remains strong, reflected by improved purchasing power. Moreover, the recent economic policy packages, unveiled by the Indonesian government, are expected to lead to more private investment as the packages improve the investment climate through deregulation and tax incentives.
The economy of Java improved, while limited growth was reported on Sumatra. Remarkably, the economy of Kalimantan experienced negative growth for the first time in a decade.
However, persistently low commodity prices and sluggish economic growth in important trading partners (for example the USA, China, Singapore and the Eurozone), have been causing a deeper contraction of Indonesian exports, while there are still no signs that a rebound is to occur on the short-term.
Next year, Bank Indonesia expects the Indonesian economy to accelerate to the range of 5.2-5.6 percent.
Indonesia's Quarterly GDP Growth 2009–2015 (annual % change):
|Year|| Quarter I
||Quarter II||Quarter III||Quarter IV|
Source: Statistics Indonesia (BPS)