Indonesia Q3 GDP growth slows slightly to 5.04% ahead of end-year stimulus measures
JAKARTA :Indonesia's economic growth decelerated slightly in the third quarter, official data showed on Wednesday, highlighting a challenge for the government to boost growth to 8 per cent by 2029.
Growth slowed to 5.04 per cent in the third quarter from 5.12 per cent in the second quarter. That means the fourth quarter will be key if the country is to meet its full-year target of 5.2 per cent and carry that momentum into 2026, which has a goal of 5.4 per cent growth. President Prabowo Subianto has pledged to lift growth to 8 per cent by 2029.
A Reuters poll had expected the economy to expand 5 per cent in the third quarter, which included deadly anti-government protests across the country. In early September, pro-growth economist Purbaya Yudhi Sadewa was brought in to replace Sri Mulyani Indrawati, a conservative, as finance minister.
Growth in household spending, which makes up more than half of Indonesia's gross domestic product, cooled slightly to 4.89 per cent in the third quarter from 4.97 per cent in the previous quarter, according to Moh. Edy Mahmud, a senior official with Statistics Indonesia.
While manufacturing, agriculture and trade contributed to third-quarter growth, mining - a key sector in resource-rich Indonesia - contracted, Edy said, which was attributable to a slump in global demand for coal and a drop in copper production in the Papua region.
He did not mention the Grasberg gold and copper mine run by Freeport Indonesia, but a mudflow disaster, which killed seven people, hit the mine, one of the world's largest, in September. Operations have been halted since.
Investment grew 5.04 per cent from a year earlier in the third quarter, decelerating from a four-year high of 6.99 per cent in the previous quarter, supported by investment in machinery, Edy said.
Government spending was up 5.49 per cent after logging a narrow contraction in the previous quarter. Meanwhile, exports were up 9.91 per cent thanks to shipments of vegetable oil, steel and automotive products.
On a non-seasonally adjusted, quarter-on-quarter basis, gross domestic product growth eased to 1.43 per cent in the third quarter, Statistics Indonesia said.
Airlangga Hartarto, Indonesia's chief economic minister, said the country needed to step up efforts to boost the economy in the fourth quarter to achieve its full-year target.
"Our efforts in Q4 needs to be further intensified so that the average figure of 5.2 per cent can be achieved (at year-end)," he told reporters.
The government unveiled a 24.44 trillion rupiah ($1.5 billion) stimulus package in June and exports grew every month from July to September even as a 19 per cent tariff on Indonesian exports to the U.S. took effect in August.
The government has unveiled more stimulus worth nearly $3 billion for the fourth quarter, while Bank Indonesia cut rates in three successive meetings before taking a pause last month.
Airlangga said there was no need for more stimulus because the existing programme was sufficient, but analysts see further room for BI rate cuts.
"We don’t expect the BI to change its stance, keeping the door open for further rate reductions," said Radhika Rao, a senior economist at DBS Bank, after the third-quarter data was released.
