Economic Growth in First Quarter of 2016 Misses Target

The Central Statistics Agency (BPS) has recorded economic growth in the first quarter of 2016 of just 4.92 percent. This is below the target set by Bank Indonesia (BI) and the forecasts of some economists, who initially predicted that Indonesia's economy could grow more than 5 percent.

BPS Chief Suryamin said that economic growth in the first quarter of 2016 was better than the 4.73 percent recorded the same quarter last year. However, when compared on a quarterly basis, economic growth in the first three months of this year was down 0.23 percent from the 5.04 percent recorded in the fourth quarter of 2015.

He explained that because economic and sectoral activities have generally only just got started, they could not contribute to economic growth in the first quarter. This is especially so if we compare it with the fourth quarter of 2015 when the economic activity had reached its peak. "(It wouldn’t be fair) to compare it with the fourth quarter of 2015, when things are at a peak due increased budget utilisation by the government and the private sector," said Suryamin at a press conference on economic growth in the first quarter of 2016 in Jakarta, Wednesday (4/5).

(Read: BI Predicts Economic Growth in First Quarter to Reach 5.2 Percent)

He added that economic growth in the first quarter was affected by a number of external factors. These included low commodity prices on the international market, China’s economic slowdown from 6.8 percent to 6.7 percent, and the stagnant US economy.

Economic growth in the first quarter was below that predicted by BI and several economists. BI’s Executive Director for Monetary Economic Policy Juda Agung had estimated that the first quarter’s economic growth could reach 5.1 to 5.2 percent, driven mainly by government spending. Capital expenditure and goods spending in the first quarter jumped 161 percent and 56 percent, respectively, compared with the same period last year.

(Read: World Bank: Economic Growth in Indonesia Depends on Economic Package)

Although private sector investment remains stagnant, Juda is confident that it will rally in the second half of this year as infrastructure development by the government initiated in the third quarter of the previous year usually results in increased private investment after five quarters.

Previously, an economist at the Development Bank of Singapore (DBS), Gundy Cahyadi, had been optimistic that Indonesia's economic growth in the first quarter could reach 5.1 percent. Similar optimism was shared by an economist at Bank Central Asia (BCA), David Sumual. Meanwhile, Bank Mandiri economist Anton Gunawan expected economic growth in the first three months of this year to reach 5.1 percent.