Indonesian 3rd quarter GDP disappoints as consumption flat

Jakarta (Antara News) - Third quarter GDP growth was slightly below estimate partly because growth in private consumption, the largest component of the economy, remained flat, said Lim Su Sian, an economist with Singapore-based DBS.

"I think consumer spending remained stable in the quarter but we are optimistic this will change over the next few quarters," she told XFN-Asia.

In coming quarters, private consumption could grow at a more normal level of 4-5 pct year-on-year, supported by recent interest rate cuts, she said.

The Central Bureau of Statistics today said third quarter GDP rose 3.49 pct quarter-on-quarter and was up 5.52 pct year-on-year. It also revised down Q2 GDP growth to 5.08 pct year-on-year and 1.96 pct quarter-on-quarter from 5.22 pct and 2.20 pct, previously.

The data shows that private consumption, which made up 61 pct of the GDP total, grew 1.66 pct quarter-on-quarter and was up 2.99 pct year-on-year.

Gundy Cahyadi, an economist with IDEAglobal Ltd in Singapore said Q3 growth overall was "slightly disappointing but still within expectations.

Private consumption was flat while I expected it to be stronger."

Both DBS and IDEAglobal had predicted Q3 GDP growth of 5.6 pct.

"My expectation is that Q4 growth will be stronger, perhaps 6.5 pct partly because of low base from last year, so full year growth should possibly be at around 5.6 pct," Cahyadi said.

He said private consumption growth is likely to pick up to a range of 3.5-4 pct in the fourth quarter.

Meanwhile, DBS' Su Sian said after the release of the latest data, she is keeping her full year growth forecast at 5.2 pct and at 5.7 pct next year. (*)
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