The Indonesian economy is seen to post growth this year at one of its lowest levels in a number of years, hitting the bottom range of the prediction made earlier by Bank Indonesia (BI).
“We predict 2015 economic growth will reach 4.7-4.8 percent, or the lower limit of the earlier projection of 4.7-5.1 percent,” BI Governor Agus Martowardojo said recently.
He added that the economy grew 4.73% in the third quarter year-on-year, higher than that of the previous quarter of 4.67%, according to a report by Antara News.
The increase was fueled largely by the government’s strong consumption and investment activities, Agus said.
“This is line with the significant progress achieved in the realization of government infrastructure projects, coupled with the government’s capital expenditure, which rose 38.8 percent, as of October 2015,” he said.
Furthermore, household consumption remained quite strong, reflected by the improving purchasing power of the public.
On the external side, low global commodity prices and the weak economic growth of trade partners, including the United States, China and Singapore, caused exports to further contract, he said.
Agus expects to see the economic growth trend in the country continuing into the fourth quarter.
“Bank Indonesia believes the Indonesian economy will continue to pick up in the fourth quarter of 2015, fueled by the expedited realization of the governments infrastructure projects,” he said.
A better year coming
Meanwhile, both the Center of Reform on Economics and Aberdeen Asset Management Ltd expect Indonesia to accelerate its growth in 2016 after it posts what may be a seven-year low GDP growth of 4.7% in 2015.
The two institutions believe that household and government spending will accelerate next year, while recently unveiled economic stimulus packages will create a more attractive investment climate, prompting both foreign and domestic investments to grow, according to a report by Indonesia-Investments.
Similarly, Indonesian Coordinating Minister for Fisheries and Maritime Affairs Rizal Ramli said economic growth in Indonesia could reach 6% in 2016 if government spending continues to improve and investors avail of the nation’s more attractive investment climate after various deregulation and tax incentive packages were released in September and October.
Photo: Hullie from nl
