Private Consumption, Gov’t Spending Boost Indonesia’s Economy

Indonesia’s economy grew 5.18% year-over-year during the April-June period, gaining pace from 4.92% in the first quarter, according to Statistics Indonesia. From the previous quarter, the economy expanded by 4.02% after contracting 0.34% during the first quarter.

It was the strongest growth rate since the fourth quarter 2013, driven by a faster increase in private consumption and government spending while investment eased and exports fell at a slower pace.

The agency said that in the June quarter, private consumption advanced 5.04 percent year-on-year, following a 4.94 percent growth in the preceding quarter. Government spending rose 6.28 percent, faster than a 2.93 percent expansion in the March quarter. Gross fixed capital formation also grew by 5.06 percent, slowing from a 5.57 percent rise in the previous three months.

Private non-profit expenditure expanded by 6.72 percent, as compared to a 6.38 percent growth in the preceding quarter. In contrast, exports fell by 2.73 percent, slower than a 3.88 percent decline in the first quarter. Imports shrank 3.01 percent, after registering a 4.24 percent contraction in the three months to March.

Household spending grew 5.04% from a year earlier, picking up from 4.94% growth in the first three months of the year.

The government has introduced measures to make it easier for companies to invest in the country as it looks for other sources of growth, after plunging commodity prices hurt its economy.

The World Bank expects Indonesia’s economy to grow 5.1% for the entire year.


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