The economic growth of Indonesia slowed marginally during the third quarter, as the official data released on 5th November revealed, which would pose some difficulty to the government in enhancing growth to 8 per cent by 2029.
The growth was low in the third quarter at 5.04 per cent compared to the second quarter at 5.12 per cent. That implies that the fourth quarter will be critical in case the nation achieves its annual target of 5.2 per cent and extends that to the year 2026, which is expected to have a growth of 5.4 per cent. President Prabowo Subianto has committed to growing by 8 per cent by the year 2029.
Reuters poll had anticipated the growth of the economy to be 5 per cent in the third quarter, which has involved fatal anti-government protests throughout the nation. In early September, Purbaya Yudhi Sadewa, a pro-growth economist, was brought into the finance ministry to replace a conservative, Sri Mulyani Indrawati.
The increase in domestic spending that contributes over half of the gross domestic product of Indonesia slowed marginally to 4.89 per cent in the third quarter as opposed to 4.97 per cent in the second quarter, according to Moh. Edy Mahmud is the head of statistics in Indonesia.
During the manufacturing period, agriculture and trade were also a boost to the growth in the third quarter, but mining, traditionally regarded as a critical sector in resource-abundant Indonesia, declined, Edy added, which could be explained by the decline in coal demand on the global market and the decline in copper production in the Papua region.
He omitted the Grasberg gold and copper mine that was operated by Freeport Indonesia, but one of the largest mines in the world was struck by a mudflow that killed seven individuals in September. This has since been stopped.
However, the third quarter growth was 5.04 per cent against 6.99 per cent a year ago because of investment in machinery, Edy added.
The government expenditure increased by 5.49 per cent following a slim decline in the last quarter. Meanwhile, an increase of 9.91 per cent was registered in the exports due to the export of vegetable oil, steel, and automotive products.
Gross domestic product growth slowed to 1.43 per cent on a non seasonally adjusted quarter-on-quarter basis, according to Statistics Indonesia.
Indonesia’s chief economic minister, Airlangga Hartarto, indicated that the nation had to increase its efforts to lift the economy in the fourth quarter to meet its full-year goal.
He informed the reporters that their work in Q4 must be further accelerated to attain the average of 5.2 per cent (end of year).
In June, the government announced a 24.44 trillion rupiah (1.5 billion) stimulus package, and the exports increased every month between July and September despite a 19 percent tariff on Indonesian exports into the U.S. coming into effect in August.
The government announced an additional stimulus of almost 3billion dollars in the fourth quarter, and Bank Indonesia reduced rates in three consecutive sessions before making a break last month.
Airlangga claimed that they did not need additional stimulus since the current programme was adequate, yet analysts believe that they can further cut the BI rates.
When BI announced the third-quarter results, a senior economist at DBS bank, Radhika Rao, said that it does not anticipate the BI to alter its position and leave the door open to further rate cuts.
