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MACROECONOMICS

Economy may grow by more than 5% in the Q1 2017

Saturday, 18 February 2017 | Ghina Ghaliya Quddus

JAKARTA. The solid export performance at the early of year is expected to boost the domestic economy to grow by more than 5% (yoy) in the first quarter 2017. This prediction was delivered by Deputy of Distribution and Service Statistics Affairs at the National Statistic Agency (BPS) Sasmito Hadi Wibowo, after overviewed the realization of export in January 2017.

According to Sasmito, the improvement in export performance was driven by the improvement in international trade performance.

As is known, Indonesia’s exports have increased by 27.71% from January 2016 to US$ 13.38 billion during January 2017.

Compared with December 2016, the value of exports has slightly decreased to the level of 3.21%. Chief of BPS Suhariyanto said, the decrease in the volume and value of export in January 2017 from the previous month was caused more by the cyclical factor.

In January 2017, the import grew lower by 14.54% (yoy) to US$ 11.99 billion. The lower import growth has improved the surplus in the trade balance from US$13.6 million in January 2016 to US$ 1.4 billion in 2017.

According to Suhariyanto, aside of the increasing commodities price, the export improvement was also driven by the improvement in the economy of Indonesia’s trading partner. This reflects on the export growth volume in January 2017.

The data of BPS show that the total of export volume increased by 9.88% to 43.22 million tons compared with January 2016, while the volume of non-oil and gas export increased by 10.77% compared with 2016.

Slower purchasing power
However, the economist at SKHA Institute Eric Sugandi predicts that the economic growth in the quarter I -2017 would only be ranging at 4.9%-5.0% (yoy). The economy in the quarter I-2017 would have not exceeded the level of 5%, due to the slower households consumptions.

The low household consumptions are predicted to be driven by the increase in the inflation rate, due to the increase in the administered prices.

However, the increases in oil and gas prices, as well as other commodities have brought positive impacts to the export performance and the purchasing power of some people, whose the incomes rely on those sectors. “The increase in energy price may also boost investment. I predict that the economy might grow by 5.2% throughout the year,” he said.

The economist at Samuel Aset Manajemen Lana Soelistianingsih said, the household consumptions growth at 5.01% in 2016 was mainly driven by the increase in non-taxation income, the increase in regional minimum wages, as well as the distribution of social assistances.

However, the condition is unlikely to repeat in this year. Let alone, the government has removed the subsidy on 900 volt ampere (VA) electricity so that the tariff has increased double. In this case, public’s purchasing power needs to be sustained to achieve the target of economic growth at 5.1%, which is set under 2017 State Budget.

Lana predicts that the household consumptions would be slower in the quarter I-2017, due to the preparations for fasting month and Iedul Fitri festival. Let alone, the new school academic year will have just commenced in May and June. “In the first quarter, the consumers would likely tend to hold the consumptions,” Lana said. (Muhammad Farid/Translator)


 

Reporter: Ghina Ghaliya Quddus
Editor: Sanny Cicilia
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