The Financial Express

Indonesia’s GDP growth likely to grow 5pc in Q2: Reuters poll

| Updated: August 11, 2019 19:54:06

File Photo (Collected) File Photo (Collected)

Indonesia’s economic growth likely to grow 5.0 per cent in the second-quarter (Q2) as soft commodity prices and weakening global trade continued to hurt exports, a Reuters poll showed on Friday.

The resource-rich country has been trying to lift GDP growth significantly, but despite heavy infrastructure investment by the government, the pace has remained about 5.0 per cent for years.

The median forecast from 16 economists in a Reuters poll was for Southeast Asia’s largest economy to have expanded 5.05 per cent in April-June from a year earlier, compared with the 5.07 per cent in the first quarter.

Household consumption, which accounts for more than half of the GDP, likely remained stable, helping the headline growth rate stay above 5.0 per cent while exports were weak, said an economist.

“Export growth continued to face some hurdles in Q2, including weakening global demand and lower commodity prices,” she Asmoro, Bank Mandiri’s chief economist.

Finance Minister Sri Mulyani Indrawati on July 16 predicted 5.1 per cent, reflecting weaker government spending, but an expected pick-up in investment.

Indrawati has announced tax incentives for some industries and pledged to push ahead lower corporate tax rates to boost investment and accelerate economic growth.

“Our domestic factors are contributing something positive for the GDP growth momentum and the global condition can also contribute a positive nuance,” Indrawati said on Thursday.

Indonesia could lift its GDP growth to an annual average of 5.4 per cent-6 per cent during Widodo’s 2019-2024 term, according to a proposal from the planning ministry.

The International Monetary Fund, which predicts a 5.2 per cent rate for 2019, sees a 5.3 per cent medium-term growth rate in Indonesia.

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