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Indonesia's Q3 GDP growth slows as exports fade
[JAKARTA] Indonesia's economic growth slowed in the third quarter, losing momentum after the previous quarter's pick up and pointing to tougher conditions for the Southeast Asian economy, which has struggled with outflows from its financial markets.
Gross domestic product (GDP) expanded 5.17 per cent in the July-September quarter from a year earlier, the statistics bureau said on Monday, compared with a 5.15 per cent expansion expected in a Reuters poll and the second quarter's 5.27 per cent. The April-June quarter pace was the fastest since late 2013.
Export contribution to GDP in the third quarter was wiped by imports, according to breakdowns given by the bureau. Authorities had expected a slowdown due to a declining net export contribution to GDP.
Growth in household consumption, which accounts for more half of Indonesia's GDP, also weakened in the third quarter.
Andry Asmoro, Bank Mandiri's economist, said the third quarter growth figures were unlikely to affect the central bank's monetary stance.
"The global challenge is still huge and prioritising stability over growth remains relevant in the current environment," he said.
Indonesia's central bank has raised interest rates five times since mid-May to slow capital outflows and lure back investors who had dumped emerging market assets.
While a trade war between the United States and China is expected to hurt economic growth in the region, most analysts say Indonesia, which is less integrated into the supply chain for major global production, will not be among the worst hit.
The trade war, however, could pressure Indonesia's economy through its financial markets, with outflows from its stock and bond markets sending the rupiah down to its weakest in 20 years.
Bank Indonesia's (BI) officials, speaking before the data was released, said there was no indication its rate hikes had affected the third quarter's growth rate, but analysts say higher borrowing costs could slow medium-term consumption.
The government has also delayed infrastructure projects and raised tariffs for a wide range of consumer goods, adding to measures that could further weaken growth.
The official government growth target this year is 5.4 per cent, but Finance Minister Sri Mulyani Indrawati last month told parliament 2018 growth was more likely to be 5.14 per cent.
The government projects growth at 5.3 per cent for next year.