Indonesia’s third quarter economy grew at the slowest speed in six quarters as slumping commodity prices cut export revenues and the global economic slowdown reduced demand for Indonesian products.
Between July and September, Southeast Asia’s largest economy, grew by 6.1 percent against the same period in 2007, the Central Statistics Agency (BPS) announced Monday.
“It can be said that there was no increase in exports (in the third quarter of 2008 from the previous three months). But the economic growth of other countries is slowing as well,” BPS chairman Rusman Heriawan.
Exports were declining as major importers cut demand in line with with the global economic downturn, the agency said.
Between July and September, the economy was supported by private consumption (57.8 percent), investment (27.5 percent), and government spending (8.5 percent), while net export and imports contributed almost nothing.
| Contributors of Indonesia’s GDP (in percentage) | ||
| Items | Q3 2007 | Q3 2008 |
| Private consumption | 61.7 | 57.8 |
| Government spending | 7.8 | 8.5 |
| Investment | 24.7 | 27.5 |
| Inventory change | 0.8 | 0.5 |
| Statistical discrepancy | 1.7 | .8 |
| Exports | 29.0 | 28.6 |
| Subtracted by imports | 25.7 | 28.7 |
| Source: Central Statistics Agency (BPS) | ||
“September represented the peak of economic activities as people’s spending rose due to an increase in income,” Rusman said.
In September, private consumption rose as people spent more money during the Islamic fasting month of Ramadan and ahead of the Islamic Idul Fitri holiday, which took place on Oct. 1.
The transportation and communications sector contributed to the highest growth at 17.1 percent during the third quarter, compared to the same period last year, while the mining sector had the lowest growth at 1.6 percent.
In the first nine months of 2008, Indonesia’s economy expanded by 6.3 percent, with the gross domestic product valued at Rp 3,705.3 trillion (US$310.72 billion).
Rusman said Indonesia’s GDP would likely exceed Rp 5,000 trillion by the end of the year.
It is estimated that per capita income will reach $2,250 per person per year by the end of the year based on the assumption that GDP would reach Rp 5,000 trillion, with a population of 228.5 million people and an average currency exchange rate of Rp 9,700 per dollar, according to Rusman.
Rusman believed the economy would slow further in the last quarter of 2008, but was still capable of achieving full-year growth of slightly above 6 percent.
“Although the economy is likely to slow to below 6 percent in the fourth quarter (of 2008), overall economic growth will still be above 6 percent for the whole year,” he said.
The government has said it will cut the price of subsidized Premium fuel by Rp 500 per liter from Rp 6,000 to Rp 5,500 starting Dec. 1. with the BPS estimating that the cut will help raise people’s purchasing power.
Central bank governor Boediono said Indonesia’s growth was far better than that of many other countries.
“I think we need to be aware for the fourth quarter. But growth in 2008 will be quite good,” he said.
Finance Ministry head of fiscal policy Anggito Abimanyu said the ministry expected to record about 6.2 percent growth by the year’s end, estimating the economy would expand by “less than 6 percent” in the last quarter of 2008.
Regarding projected economic growth for 2009, the BPS said growth would be less than 6 percent as pessimism clouded businesses and the government.
“A 6 percent growth is the maximum,” Rusman said.
Finance Minister Sri Mulyani Indrawati has said Indonesia’s economy may slow to as low as 5 percent in 2009 as the world economy feels the wider impact of the recession.