Log in
Login
Password
Remember
Forgot password ?
Become a member for free
Sign up
Sign up
Settings
Settings
Dynamic quotes 

4-Traders Homepage  >  News

News

Latest NewsCompaniesMarketsEconomy & ForexCommoditiesInterest RatesHot NewsMost Read NewsRecomm.Business LeadersCalendar 

Indonesian Economy Grows at Slowest Pace Since 2010, Exports Fall

share with twitter share with LinkedIn share with facebook
share via e-mail
0
11/05/2012 | 09:57am CEST

-- Indonesia's economy grows at slowest pace in more than two years

-- Investment and private consumption lend support, but exports contract

-- Indonesian investment chief warns global uncertainties may curb growth in 2013

(Rewrites throughout.)

By Andreas Ismar and Farida Husna

JAKARTA--Indonesia's economy grew at its slowest pace in more than two years in the third quarter as the global slowdown hurt demand for commodities, but strong investment and healthy domestic spending still kept it among the world's best performers.

Gross domestic product grew 6.17% on-year in the quarter ending Sept. 30, slower than the previous quarter's 6.37% expansion. The figure matched the median forecast of 12 economists polled by Dow Jones Newswires.

It was the slowest growth rate for Southeast Asia's largest economy since the first quarter of 2010, the Central Statistics Agency said Monday. Crucially, exports were down 2.78% on-year.

"Indonesia needs to be vigilant about global conditions as exports are serving as a drag on growth," said Chatib Basri, head of the country's investment board. "This data are a warning that we need to be prepared amid uncertain global conditions...The challenge is not in 2012, but lies in 2013."

In sequential terms, the economy grew 3.21% from the second quarter--slightly below economists' median forecast of 3.28% but faster than the previous quarter's 2.80% rise.

Indonesia in recent years has been one of the bright spots of the global economy, clocking 6.5% growth last year, its fastest rate since the Asian financial crisis in the late 1990s.

As a major producer of palm oil, coal, rubber and tin, however, Indonesia is now feeling the brunt of slumping commodity prices and slower demand from China and India. That is a shift from the global financial crisis, when demand from China and India supported the archipelago's exports.

"We have noted previously that the near-term risk for the economy lies with the growing dependence on its commodity sector," OCBC economist Gundy Cahyadi said. "It remains to be seen how rapidly export growth will recover, with our expectation right now penciling it in the second half of 2013."

The government expects the economy to grow 6.1%-6.5% this year, and said it could be slightly higher in 2013. The World Bank has forecast 6.0% growth for Indonesia this year.

Investment rose 10.02% in the third quarter from a year earlier. Private consumption expanded 5.68%, its strongest pace since the beginning of 2009.

"It's quite remarkable to see that investment growth has remained resilient in the third quarter, with double-digit growth possibly also supported by lots of infrastructure work," OCBC's Mr. Cahyadi said.

Despite the strong investment figures, the outlook is unclear. Authorities in recent months have issued a slew of regulations that some see as protectionist: slapping an export tax on raw mineral ahead of a full export ban in 2014, requiring foreigners to divest more of their ownership in the mining sector and tightening limits on ownership of Indonesian banks.

Businesses have warned that the government could opt for more populist policies ahead of 2014 presidential and parliamentarian elections, which also could deter investment.

In addition, inflationary pressures are fueling labor protests for higher wages. Last month laborers from the greater Jakarta area demanded raises of nearly 70%, to 2.7 million rupiah ($280) per month.

"The rising labor protests have taken the shine off Indonesia as one of the most attractive investment destinations," said Ade Sudrajat, chairman of the Indonesian Textile Association.

By sector, transportation and communication rose 10.48% from a year earlier, followed by construction at 7.98%, and finance and real estate at 7.41%.

Mining was the only sector to contract, down 0.1% on-year in the third quarter.

--I Made Sentana and Linda Silaen contributed to this article.

Write to Andreas Ismar at andreasismar.sandiwan@dowjones.com and Farida Husna at farida.husna@dowjones.com

share with twitter share with LinkedIn share with facebook
share via e-mail
0
React to this article
Latest news
Date Title
02:25a Expanded Panama Canal - Bigger ships, bigger paydays for beans, coal, gas
02:06a FORD MOTOR : 55 couples renew vows at Edsel & Eleanor Ford House
01:37a INTERCONTINENTAL HOTELS : New hotel opens in Troy
01:37a TOWN & FIN : Illinois Bankers Association announces new chairman for fiscal year
01:35a 3M : accused of contaminating drinking water in another lawsuit
01:31a AUSTRALIAN GREENS : Greens to invest in Antarctic Science. It's time to remove the world’s blindfold as we face climate change
01:25a SKYE BANK : Army defends Buratai over $1.5m Dubai properties
01:25a UNITY BANK : Institute raises alarm over TUC/Unity Bank $1b deal
01:08a 2016 BRIDGESTONE INVITATIONAL : During stunning run of success, Jason Day develops tight bond with mentor Tiger Woods
01:07a DRAX : Holding(s) in Company
Latest news
Advertisement
Hot News 
ELECTRO RENT : Platinum Equity Increases Electro Rent Purchase Price Offer to $15.50 Per Share
Incipio Group to Acquire Skullcandy; Create Leading Technology, Creative Culture and Mobile Lifestyle Company
FINISH LINE : Reports First Quarter Fiscal Year 2017 Results
LSL PROPERTY SERVICES : May 16 Buy-to-Let Index
B&M EUROPEAN VALUE RETAIL : Annual Report and Accounts 2016
Most Read News
07:31p AUSTRALIAN GREENS : Greens to invest in Antarctic Science. It's time to remove the world’s blindfold as we face climate change
06:16p Alipay could take stake in Wirecard - report
08:25p Expanded Panama Canal - Bigger ships, bigger paydays for beans, coal, gas
07:07p DRAX : Holding(s) in Company
06:44p MANCHESTER UNITED : close in on Henrikh Mkhitaryan and Zlatan Ibrahimovic deals
Most recommended articles
08:25p Expanded Panama Canal - Bigger ships, bigger paydays for beans, coal, gas
06:51p 'No need to write, David,' impatient EU tells Cameron
06:16p Alipay could take stake in Wirecard - report
04:09p GEORGE SOROS : Investor George Soros calls for reconstruction of EU after 'Brexit' vote
12:28pDJVOLVO : Truck Maker Volvo Raises Provision for Possible EU Antitrust Fines