Indonesia GDP growth on track despite fall in 3rd quarter: central bank

Jakarta (The Jakarta Post/ANN) - Indonesia central bank Governor Darmin Nasution said he was optimistic the growth of the country's gross domestic product (GDP) would meet the central bank's target of 6.3 per cent this year despite slowdown in the third quarter.

He said that economy would pick up at a higher growth rate in the final quarter thanks to an increase in investment and the government's higher capital spending.

Indonesia's GDP grew 6.2 per cent in the third quarter from a year earlier, down from 6.4 per cent in the second quarter, partly due to decline in exports and low government spending.

"I see our economy will expand at around 6.2 to 6.3 per cent in the fourth quarter, bringing in the yearly economic growth at 6.3 per cent," he told reporters at Bank Indonesia (BI), the central bank, headquarters in Jakarta yesterday.

The stalling recovery in the world's economy "has put downward pressure" on Indonesia's economic growth, Nasution acknowledged.

However, he predicted that investment would remain strong in the fourth quarter and could compensate for the likely decline in exports caused by the global slowdown.

The central bank governor also promised to maintain the loose monetary policy to ensure Indonesia maintains its economic expansion.

In its board of governors meeting Thursday, BI decided to keep its policy rate at the historic low of 5.75 per cent for the ninth consecutive months.

By keeping its policy rate unchanged, BI followed a different path to other central banks in the region, which have been busy cutting rates to spur their economies as response to the global slowdown. Last month, the Philippines, Thailand, South Korea, Brazil and Australia lowered their policy rates by 25 per cent.

"Nowadays, it seems that cutting rates has become a trend among many central banks throughout the world. BI, however, does not have to do it because we cut our rates already last year to anticipate the slowdown," said Nasution.

Contacted separately, Airlangga University economist M. Ikhsan Modjo shared similar views. He believed Indonesia would be able to achieve the annual economic growth of 6.3 per cent this year on the back of strong investment and higher government spending.

"The pattern is always the same every year: The government usually accelerate the realisation of capital spending in the fourth quarter," he said, referring to the fact that, as of September, the government had only managed to realise 36.8 per cent of the capital spending set at 168.7 trillion rupiah (US$17.5 billion).

Meanwhile, BI announced that Indonesia recorded $800 million of surplus in its balance of payment in the third quarter, after previously recording a $2.8 billion deficit in the second quarter.

The surplus was attributed to the decline in the deficit in the current account, one of the two primary components of the balance of payments, with the other being the capital account.

In the third quarter this year, current account deficit stood at $5.3 billion in the third quarter, or 2.4 per cent of the GDP, compared to the second quarter's figure of $7.7 billion (3.5 per cent of GDP), according to the central bank.

  • How a mom stole a car in under 60 seconds 9 hours ago
    How a mom stole a car in under 60 seconds

    “I didn't steal your car but I think my mom may have. It's a long story. I'll explain, but your car is safe and sound," read the flier posted in Red Hook, Brooklyn. It’s a strange tale that began when Cheyrl Thorpe was asked by her daughter Nekisia Davis to dog sit her Pomeranian at her apartment, according to New York Magazine.

  • All-new 2015 Subaru Outback reestablishes higher ground 11 hours ago
    All-new 2015 Subaru Outback reestablishes higher ground

    Much of Subaru’s modern day success in America can be attributed to one car: the Outback. Born in 1994 as a response to the growing popularity of SUVs, the Outback established a winning formula of combining a high-riding suspension, butch body cladding and big round fog lights to its comfortable, no-nonsense Legacy wagon. It is the kind of unique product that only a quirky company like Subaru could build, and was one that kept Subaru from slipping into ubiquity even as traditional SUVs and crossovers have taken over the world.

  • Custom faux-tique electric tram aims to replace New York's horses over the neigh-sayers 12 hours ago
    Custom faux-tique electric tram aims to replace New York's horses over the neigh-sayers

    For the record, it's the year 2014. I mention that in case someone reading this story about a push to replace horses with motorized carriages thinks they've stumbled onto some archival piece by accident. It's been more than 100 years since the first vehicles began to trundle around Manhattan, but the last remaining vestiges of horse-powered transport in the city could be nigh — if the backers of a massive electric wagon get their way.

  • Singaporeans slam NEA's $120 licence requirement for tissue sellers
    Singaporeans slam NEA's $120 licence requirement for tissue sellers

    Singaporeans on social media reacted angrily to news that tissue sellers at hawker centres and street corners are being required to pay for an annual licence.

  • Heartbreaking texts from students on sinking S. Korea ferry
    Heartbreaking texts from students on sinking S. Korea ferry

    Heart-wrenching messages of fear, love and despair, sent by high school students from a sinking South Korean ferry, added extra emotional weight Thursday to a tragedy that has stunned the nation. Nearly 300 people -- most of them students on a high school trip to a holiday island -- are still missing after the ferry capsized and sank on Wednesday morning. Mom, I love you," student Shin Young-Jin said in a text to his mother that was widely circulated in the South Korean media.

  • ‘Huge’ Hindu, Buddhist statues against Islam, ex-judge says
    ‘Huge’ Hindu, Buddhist statues against Islam, ex-judge says

    KUALA LUMPUR, April 16 — The “huge” statues at a Hindu temple in Batu Caves and Buddhist temple in Penang are an affront to Islam as the religion forbids idolatry, a retired Court of Appeals judge...