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ECONOMIC DIGEST

Consumptions supported 2016 economy

Monday, 06 February 2017 | Adinda Ade Mustami, Ghina Ghaliya Quddus, Ramadhani Prihatini

JAKARTA. The National Statistic Agency (BPS) will immediately release the report on economic realization along 2016. The performance of economic policies designed by Minister of Finance Sri Mulyani will be at stake in this report. Sri Mulyani was appointed as the Minister of Finance by President Joko Widodo in the middle of 2016.

Some analysts agree that the 2016 economic growth will be better than the previous year. The economy only grew by 4.79% in 2015, the lowest during the last six years. The 2016 economy is predicted to grow by around 5%-5.06%.

Head of Economists of Bank Mandiri Anton Gunawan said, the economic growth at 4.9% in the fourth quarter of 2016 will lead to a 5% economic growth throughout 2016.

Nevertheless, Anton assessed that overall, the 2016 economy tended to be slower. This reflects on the domestic demands and business activities. The lower current account deficit (CAD) in 2016 that is predicted to stand at 2% of GDP may indicate the lower domestic demands. In 2015, the CAD stood at the level of 2.1% of the GDP.

The decrease in demands also reflect on 2016 inflation rate at the level of 3.02%, or lower than the inflation rate that stood at 3.35%. Aside of inflation rate, the realization of tax revenues and the credit growth in 2015 also indicate the lower demands.

Fulvian said, the economic growth in 2016 would have been supported by the export recovery. “The recovery could cover the government expenditures,” he said.

Economist at Maybank Indonesia Juniman said, aside of the positive export performance at the end of 2016, the economic growth in the fourth quarter of 2016 was also supported by the preparations of concurrent local elections. Juniman predicts that the 2016 economic growth would have grown by around 5.06%.

“Rupiah stable exchange rate also supported export recovery,” said economist at Bank Central Asia (BCA) David Sumual.

According to the economist at PT Bank Permata Josua Pardede, the household consumptions in the quarter IV-2016 grew by 5.05%. The household consumptions would have contributed the most to the economic growth during the same period. The increase in household consumptions reflects on the improvement in automotive sales, the stronger index, the improving consumers’ confidences, and the solid retail sales, he added.

The consumption improvement would also be supported by the public spending, mainly in the commodity-producer provinces. On the other hand, the investment in the real sectors, as well as the investment credit allocation in the last quarter of 2016 also tended to increase. (Muhammad Farid/Translator)

Reporter: Adinda Ade Mustami, Ghina Ghaliya Quddus, Ramadhani Prihatini
Editor: Barratut Taqiyyah