Economy only grows by 0.52% amid weak exports, investment<\/p>\n
Dadan Wijaksana, The Jakarta Post, Jakarta<\/p>\n
The economy, as measured by gross domestic product (GDP), grew
\nby only 0.52 percent in the second quarter of this year due to a
\nslowdown in exports and lower investment, the Central Bureau of
\nStatistics (BPS) said on Thursday.<\/p>\n
BPS said in a statement that second-quarter economic growth
\nwas mainly attributable to higher consumer and government
\nspending.<\/p>\n
It pointed out that consumer spending grew at a higher rate of
\n1.16 percent in the second quarter, compared with 0.51 percent in
\nthe first, while government spending was higher, at 2.88 percent
\nfrom minus 2.35 percent.<\/p>\n
During the past year, consumer and government spending were
\nthe main source of growth in the economy as exports and
\ninvestment remained in the doldrums due to various uncertainties
\nboth at home and overseas.<\/p>\n
BPS said that while imports grew at a higher rate of 4.28
\npercent in the second quarter, exports were slower, at a pace of
\n2.09 percent. Investment also slowed down, at 1.34 percent.<\/p>\n
\"The (GDP) growth has been driven by all sectors of the
\neconomy except mining,\" BPS said.<\/p>\n
The weak second-quarter economic growth is casting doubt on
\nwhether the government's 4 percent economic growth for this year
\ncan be achieved. The National Development Planning Board
\n(Bappenas) and other independent experts have previously said
\nthat this year's growth would only be around 3 percent.<\/p>\n
A slower economic growth would have serious consequences,
\nincluding a greater number of unemployed people, which, in turn,
\ncould create various social problems.<\/p>\n
But BPS said that second-quarter economic growth was much
\nbetter when compared with the same period last year. Year-on-
\nyear growth for the quarter was 3.51 percent, which was also
\nmainly driven by stronger domestic spending.<\/p>\n
During the first semester of this year, the economy grew by
\n2.87 percent over the same period last year.<\/p>\n
Economists, however, said that if exports and investment
\nremained weak during the next quarters, the year-on-year growth
\nwould slow down. That is because the government's ability to
\nspend money would become very limited as it would instead focus
\non how to limit spending to ensure that the state budget deficit
\nwas maintained at a safe level of 2.5 percent of GDP.<\/p>\n
Bank Mandiri economist Martin Panggabean told The Jakarta Post
\nthat exports should now become a priority for the government in
\nboosting growth as weakened purchasing power was likely to hurt
\nthe current spending spree.<\/p>\n
\"We can no longer rely on strong domestic consumption alone to
\nboost growth. And as hope for (new) investment is out of the
\nquestion, I think exports should be a priority,\" Martin said.<\/p>\n
To do that, according to Martin, the government should pay
\nmore attention to high-end manufacturing and electronic products.<\/p>\n
\"There is still plenty of room for improvement in electronics,
\nand maybe pulp and paper. We should pursue these as alternatives
\ninstead of focusing merely on textile and shoe products, which I
\nconsider to be sunset industries.\"<\/p>\n
Continuing labor conflict and security problems, coupled with
\nthe economic slowdown in the U.S. and Japan, Indonesia's major
\ntrading partners, are hurting Indonesia's export products.<\/p>\n
The above uncertainties are also discouraging both foreign and
\ndomestic investors from making new investments in the country.<\/p>\n
Nevertheless, despite all the gloomy outlook, Martin was
\noptimistic that the country remained on track to achieve a growth
\ntarget of 4 percent.<\/p>\n
\"With the (year-on-year GDP growth) figure, which is higher
\nthan I expected, the government should be on track for achieving
\nthe full-year target of 4 percent,\" he said.<\/p>\n
Sharing Martin's view, BPS head Sudarti Surbakti said the
\ncountry's growth target was attainable \"if conditions remain
\ngood.\"<\/p>\n
Eye-box<\/p>\n
Growth of GDP components in Q2 (%)<\/p>\n
----------------------------------------------------------<\/p>\n
quarter-on-quarter year-on-year
\n-----------------------------------------------------------
\n1. Household spending 1.16 6.30
\n2. Govt spending 2.88 9.40
\n3. Fixed capital formation 1.34 -1.01
\n4. Exports 2.09 -7.09
\n5. Imports 4.28 -21.6
\n-----------------------------------------------------------
\nGDP 0.52 3.51
\n------------------------------------------------------------
\nSource: BPS<\/p>",
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