Indonesia's economy expands 5%, matching forecasts

[JAKARTA] Indonesia's economy grew in line with economists' forecasts in the third quarter as President Joko Widodo seeks to spur the nation onto a higher growth path.

Gross domestic product increased 5.02 per cent in the third quarter from a year earlier, compared with a revised 5.19 per cent in the second quarter, the statistics bureau said in Jakarta on Monday.

The median estimate of 22 economists surveyed by Bloomberg was for growth of 5.08 per cent.

GDP rose 3.2 per cent in the third quarter from the previous three months, compared with a median estimate of 3.25 per cent in a Bloomberg survey.

South-east Asia's biggest economy has been undershooting the seven per cent growth target set by Mr Jokowi when he took office two years ago, mainly due to low commodity prices and weaker global demand.

Mr Jokowi is seeking billions of dollars to help fund an ambitious infrastructure agenda that includes building roads, railways and sea-ports.

He said last week the government has now set its sights on growth of more than six per cent in 2018 and a 10 per cent boost in investment.

Also helping to support the growth outlook are six interest rate cuts by Bank Indonesia this year to spur spending as inflation remains inside the three per cent to five per cent target band.

"What's lacking in the economy is private investment at this juncture," Gundy Cahyadi, an economist at DBS Group Holdings Ltd in Singapore, said in a note before the data was released.

"Overall investment growth has recovered, but only at a gradual pace, and still some distance away from the seven to eight percent that we think it is capable of."

Government spending was 439.7 trillion rupiah (S$47.28 billion) in the third quarter compared with 484.8 trillion rupiah a year ago.

BLOOMBERG