Business

Indonesia's Q4 GDP growth below 5% on cooled spending

JAKARTA: Indonesia's gross domestic product grew 4.94 per cent in the fourth quarter to mark the slowest pace since the opening three months of last year, as household consumption cooled and government spending contracted, data showed yesterday.

South-east Asia's largest economy also faces uncertainty surrounding US policies under President Donald Trump and in one of its other main trading partners China, even as a spate of interest rate cuts last year should start to pay dividends by supporting investment.

The growth rate was below the median forecast of a Reuters poll of 5.07 per cent.

GDP expanded 5.02 per cent during last year, up from a revised 4.88 per cent in 2015. The poll had expected a full-year growth rate of 5.03 percent.

The government originally set a 5.3 per cent growth target for last year, but revised it to 
5 per cent later.

Growth in the fourth quarter was helped by firmer commodity prices that increased exports, while government spending and investment contracted.

Meanwhile, the government spent 223.4 trillion rupiah (S$23.57 billion) less than planned last year, taking a toll on GDP expansion.

"While we think the worst is now over, with commodity prices likely to remain depressed and policymakers running out of scope to stimulate the economy further, we expect growth to remain stuck at around 5 per cent over the next couple of years," Mr Gareth Leather, an economist at Capital Economics, said.

The central bank, which has cut key interest rates six times last year to help growth, may have limited room to boost growth this year as it expects inflationary pressure at home amid global uncertainties.

- REUTERS

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