Indonesia Economy Slows Further In Second Quarter 2015

Photo: AFP.

Indonesia’s growth slid in the second quarter to levels unseen since 2009, government data showed Wednesday, highlighting the uphill battle for President Joko Widodo in expanding Southeast Asia’s biggest economy.

The Indonesia economy grew at 4.67 per cent year-on-year in the three months to the end of June, from 4.72 per cent in the previous quarter, Indonesia’s statistics agency said. First quarter growth was revised up from 4.71 per cent.

OCBC Bank economist Wellian Wiranto told AFP the result was “largely disappointing”.

“There’s no engine to support growth at this point,” he said.

“We see weakness across the board from household spending to government spending and also investment activities.”

The usual contributors to economic growth in Indonesia such as manufacturing, trade and mining slowed compared to the same period last year, the statistics agency said.

Joko Widodo, elected in October, had promised to boost government spending in a bid to kickstart growth in the lagging economy, but the results were not evident in the second quarter figures.

The president won praise for removing hefty, politically sensitive fuel subsidies early in his term, promising to use the funds to overhaul the country’s creaking infrastructure.

But expenditure on such projects has been slow, with bureaucracy in the sprawling archipelago of 17,000 islands just one of the factors blamed for holding back the president’s plan.

Foreign investors have been reluctant to inject funds into the country, with some observers criticising inconsistency in government policy for the lack of confidence.

Domestic consumption, once a key driver of economic growth in the nation of 250 million people, has also dipped when compared to the same quarter last year.

President Widodo has set a growth target this year of 5.2 per cent but has been warned a slowdown in China and a dip in commodity prices – a large chunk of Indonesia’s exports – could thwart this goal.

The gloomy global and domestic outlook has prompted some economists to revise down Indonesia economy full year growth figure down to below five per cent.

“Looking ahead, while we don’t think growth will drop further, we don’t see scope for much of a rebound either,” British-based consultancy Capital Economics said.

“We are taking down our growth forecast for this year to 4.7 per cent from 5.0 per cent previously.”

Story: AFP

By signing up for our newsletters you agree with our Terms of Service and Privacy Policy

Leave a Reply

Coconuts TV
Our latest and greatest original videos
Subscribe on