Indonesia economy slows as commodity price slump bites

Indonesian Rupiah bills. Photo: Pxhere
Indonesian Rupiah bills. Photo: Pxhere

Indonesia posted another quarter of slowing growth Tuesday, its weakest pace in two years, as Southeast Asia’s biggest economy feels the sting of slumping commodity prices.

The economy expanded 5.02 percent in the July-September period, slipping from 5.17 percent in the same period last year, and the weakest since 2017.

Indonesia is grappling with slumping prices for key commodities such as coal and palm oil, as the global economy falters on the back of an intensifying US-China trade war.

“The global economy is shadowed by uncertainty,” said statistics agency head Suhariyanto.

“During the third quarter, prices for our commodities… have dropped in the international market,” he added.

Last month Indonesia’s central bank cut interest rates for the fourth month in a row in a bid to pump up the economy.

The sagging growth is a challenge for Indonesian President Joko Widodo, who was re-elected this year largely on his infrastructure-driven bid to energise the economy.

“The prospects for a sustained improvement in economic performance depend on whether Joko Widodo can forge ahead with his reform agenda, including pushing through unpopular labour market reforms and big increases in infrastructure spending,” research house Capital Economics said in a report.

“We remain unconvinced,” it added.

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