Economic Minister & Bank Indonesia Deputy Differ on Q2 GDP Growth
Darmin Nasution, Indonesia's Coordinating Economic Affairs Minister, is optimistic that gross domestic product (GDP) of Southeast Asia's largest economy can expand between 5.1 and 5.3 percent year-on-year (y/y) in the second quarter of 2017.
Main reason for this optimism is that global economic activity as well as global consumption - especially in the United States and Europe - is expected to have risen ahead of the summer. This should then have impacted positively on Indonesia's export performance.
Moreover, domestically, consumption has risen in Indonesia ahead of - and during - the Islamic Ramadan month and the Idul Fitri celebrations that mark the end of the fasting month.
In the first quarter of 2017 Indonesia's economy expanded 5.01 percent (y/y), a better performance compared to 4.92 percent (y/y) in Q1-2016 or 4.71 percent (y/y) in Q1-2015, reflecting accelerated economic growth, particularly supported by rising commodity prices (which also shows that the Indonesian economy remains vulnerably dependent on global commodity price swings).
Last year Indonesia's economic growth in the second quarter was recorded at 5.19 percent (y/y), the peak in terms of quarterly growth in 2016. In the vision of Indonesia's central bank (Bank Indonesia), it will be very hard to surpass that figure (or even to match it). Perry Warjiyo, Deputy Governor of Bank Indonesia, said economic growth of Indonesia will not touch 5.1 percent (y/y) in the second quarter due to weaker exports and bleak non-construction investment. As such, his opinion is in contrast to the opinion of Minister Nasution.
Indonesia's Statistics Agency (BPS) is expected to release the official Q2-2017 GDP growth figure in early August.
Indonesia's Quarterly GDP Growth 2009-2017 (annual % change):
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Source: Statistics Indonesia (BPS)