Indonesia Q1 GDP y/y growth slows, shrinks for 2nd quarter in a row

08, May. 2019

JAKARTA, NNA – Indonesia’s economy grew 5.07 percent from a year earlier in the January-March quarter, the lowest growth rate in a year, slowing from 5.18 percent in the final quarter of 2018, due to weaker consumption.

Q1 GDP posted the second straight quarter-on-quarter contraction, down 0.52 percent, after shrinking 1.69 percent in Q4.

Statistics Indonesia released gross domestic product data for the first quarter of 2019 on Monday.

Key points:

―― Q1 GDP growth was disappointing after increased government spending ahead of the presidential election in April. The market consensus figure was about 5.2 percent.

―― Private consumption, which accounts for over half of Indonesia’s total domestic output, grew 5.01 percent on year in Q1, slightly slower than the 5.08 percent seen in Q4. It was flat (+0.04 percent) on quarter after rising 0.09 percent in October-December.

―― Net exports, exports minus imports, fell 7.75 percent on year and plunged 17.34 percent on quarter. Exports of goods and services decreased by 2.08 percent y/y and slumped 7.04 percent q/q.

Takeaway:

―― There is a seasonal pattern for Indonesia’s GDP showing a year-on-year contraction every first quarter in recent years, but the U.S.-China trade dispute that is slowing global growth is affecting Indonesia. Annual economic growth in the country has been stuck in a narrow range around 5 percent in recent years, due also to slow progress in structural reform, economists say.

―― Last month, Indonesia’s central bank left its key policy interest rate unchanged for a fifth month, as expected, to shield Southeast Asia’s largest economy from external shocks amid slower global growth. The bank expects the domestic economy to grow in a range of 5.0 to 5.4 percent this year.