Indonesia's Statistics Agency (BPS) announced that the nation's official gross domestic product (GDP) edged up to a growth pace of 5.01 percent year-on-year (y/y) in the first quarter of 2017. This figure is in line with analysts' forecasts and constitutes the third consecutive year of accelerating economic growth of Indonesia in the first quarter. In Q1-2015 and Q1-2016 GDP growth was recorded at 4.71 percent (y/y) and 4.92 percent (y/y), respectively.
Indonesia's economic growth in the first quarter of 2017 was supported by all sectors within the economy with the exception of mining and quarrying that contracted 0.49 percent on an annual basis. Information and communication showed the strongest growth with a pace of 9.10 percent (y/y).
Meanwhile, exports of goods and services improved markedly, expanding 8.04 percent (y/y) in Q1-2017. This performance was attributed to recovering commodity prices as well as improved economic growth in Indonesia's main export markets. Prices of coal, crude palm oil, rubber and nickel, all key export products of Indonesia, improved over the past year.
The Indonesian economy remains highly dependent on the direction of commodity prices. Although the central government is eager to boost the manufacturing industry (to reduce the nation's dependence on volatile commodity exports), the significance of Indonesia's manufacturing industry (toward the economy) fell in Q1-2017. Whereas, the manufacturing industry accounted for 21.05 percent of GDP in Q1-2016, the figure slowed to 20.47 percent in Q1-2017.
The role of private consumption slightly eased in Q1-2017. Household consumption now accounts for 56.94 percent of total GDP, slightly down from 57.70 percent in the same quarter one year ago. This indicates that Indonesia's consumer purchasing power and consumer confidence are yet to recover.
Read more: Indonesia's official Q1-2017 GDP data
Meanwhile, both investment and government expenditures also fell slightly in Q1-2017. As such, we can conclude Indonesia's accelerating economic growth in the first quarter of 2017 is particularly the result of recovering exports (due to recovering commodity prices and recovering economies of key export destinations).
Indonesia's Quarterly GDP Growth 2009-2017 (annual % change):
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Source: Statistics Indonesia (BPS)