Regional News
JAKARTA—Indonesia’s economy picked up speed in the third quarter, expanding 3.46% from the prior quarter, the government said Monday, reflecting the resilience of the domestic economy in the face of slowing growth elsewhere.
The growth for the quarter ended September compared with a revised 2.89% gross domestic product increase in the quarter ended June, the official Central Statistics Agency said. On a year-to-year basis, GDP rose 6.54% during the quarter, compared with a revised 6.52% in the second quarter.
The figures aren’t seasonally adjusted.
The median forecast from 14 economists polled by Dow Jones Newswires was for GDP to grow 6.6% year-to-year, while the median forecast of seven economists was for the economy to expand 3.6% quarter-to-quarter.
With the Indonesian economy showing few signs of slowing down, Bank Indonesia may opt to leave its policy rate unchanged Thursday after surprising markets last month by cutting the rate to 6.5% from 6.75%.
“Indonesia maintains its robust growth pace and is still on track to post 6.5% to 6.6% growth this year. Indeed there are risks for a global slowdown, but on the other hand domestic loan growth may reach 25% this year, above the central bank’s target of 22%,” said Bank Central Asia economist David Sumual. He said the majority of domestic loans are extended to consumers.
“I would suggest BI pause its interest rate-cut cycle this week to wait for more data to assess global risk, while at the same time reducing the risk of over-aggressive loan extension. But, there’s an increasing risk that BI will cut the key rate on Nov. 10 due to low inflation and global growth risk,” Mr. Sumual said.
Bank Indonesia will hold its next policy interest rate-setting meeting Thursday, with economists mixed as to whether the central bank will cut the rate further.
Central bank Gov. Darmin Nasution said last week that inflationary pressure is likely to trend lower, with full-year inflation likely to be below 4.7%, giving the bank room to lower its policy rate. Bank Indonesia is aiming for full-year inflation of 4% to 6%. Mr. Nasution didn’t elaborate as to the timing of any such an interest rate cut.
Mandiri Sekuritas economist Aldian Taloputra said that even though third-quarter GDP growth undershot the median forecast, full-year growth may still hit 6.5% as “even if there’s a slowdown in exports in the fourth quarter, it will [likely] be offset by rising investment.”
The government forecasts GDP growth of 6.5% for 2011, though Bank Indonesia officials have said the pace may reach 6.6%.
The statistics agency also revised upward first-quarter GDP growth to 1.55% quarter-to-quarter from 1.53%, and to 6.49% year-to-year from 6.47%. It didn’t provide a reason for the revisions.
Write to Farida Husna at [email protected]
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By: Farida Husna and Andreas Ismar
Source: The Wall Street Journal, Nov. 7, 2011
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