Indonesia optimism despite drop in economic growth

Despite economic growth slowing in the third quarter, the government remains optimism that better state budget realization will lead to an economic rebound by year-end.

Economic growth slowed to 5.02 percent year-on-year (yoy) in the third quarter amid a reduction in government spending and weak international trade, the Central Statistics Agency (BPS) announced on Monday. Growth stood at 5.19 percent yoy in the previous quarter.

President Joko “Jokowi” Widodo, however, said he was grateful that growth was slightly above the government’s initial forecast of 4.9 percent

“Our estimate was slightly below 5 percent. It turned out that, Alhamdulillah [Thank God] it is now a bit above 5 percent,” Jokowi told reporters on Monday.

Jokowi voiced optimism that growth in the final quarter would improve with better state budget realization.

“We expect the budget realization rate to be slightly better in the fourth quarter, although we should also understand that the global economy continues to decline,” he said.

BPS chief Suhariyanto said government spending had contracted by 2.97 percent yoy due to recent budget cuts. However, cumulative government spending from January to September increased 1.97 percent from the same period last year.

Amid a weak global economy, Indonesia saw its gross domestic growth increase only 4.79 percent last year, the lowest rate in six years. The government is targeting economic growth of 5.2 percent this year and 5.1 percent in 2017.