Damhuri Nasution, Head of Economic Research at the Danareksa Research Institute, said the Indonesian economy will grow at a robust pace in both 2018 and 2019 on the back of strengthening exports and investment. Exports are projected to rise amid the improving global economy, while investment is seen rising on the back of domestic infrastructure projects and Indonesia's improving investment climate. Meanwhile, household consumption and government spending are estimated to remain stable.

Regarding the rupiah, Nasution believes the currency will remain volatile and under pressure in the short-term because of monetary tightening in the USA, simmering global trade concerns (caused by deteriorating USA-China relations), and rising crude oil prices that put more pressure on Indonesia's current account deficit.

While Danareksa expects slowing economic growth for Indonesia in 2019, it sees strongly accelerating growth to the range of 5.3 - 5.4 percent (y/y) in 2020.

Meanwhile, Doddy Zulverdi, Executive Director at Bank Indonesia's International Department, believes that the Indonesian government's efforts to improve the current account balance will not lead to slowing economic growth provided it offers fiscal policies that encourage industrialization, for example through new tax holidays (that are in the pipeline).

Indonesia Investments still has its full-year 2018 GDP growth target of Indonesia at 5.2 percent (y/y). For in-depth analyses about the Indonesian economy, politics and social developments, we refer you to our monthly research reports.

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

Year Quarter I
Quarter II Quarter III Quarter IV Full-Year
2018     5.06     5.27
2017     5.01     5.01      5.06      5.19      5.1
2016     4.92     5.19      5.01      4.94      5.0
2015     4.71     4.66      4.74      5.04      4.9
2014     5.14     5.03      4.92      5.01      5.1
2013     6.03     5.81      5.62      5.72      5.6
2012     6.29     6.36      6.17      6.11      6.0
2011     6.45     6.52      6.49      6.50      6.4
2010     5.99     6.29      5.81      6.81      6.2
2009     4.60     4.37      4.31      4.58      4.6

Source: Statistics Indonesia (BPS)

Discuss