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JAKARTA. Economists estimated that the slow growth of household consumption has caused to the slow economic growth during the third quarter of 2016, while the cuts in goverment expenditures have started affecting the economy.
The economists expected that the economic growth in the third quarter of 2016, which will be announced by the Statistics Indonesia (BP), is expected to be lower than the growth in the last second quarter of 2016 that stood at 5.18% on year on year basis.
Economist at Aset Manajemen Lana Soelistianingsih projected that as of the end of third quarter of 2016 the economy grew by 4.9%-5.03% on year on year basis. Lana expected that the improvement in retail sales will lead the economic growth to have potentials to grow at above the prediction.
However, on the other hands, the economic growth may be slower than the expectation due to the slow credit growth. The estimations have included the slow performance in imports of raw materials and capital goods. “The real sector complained of the difficult condition. Therefore, the economy tends to move to the lower limit,” Lana said.
Lana predicted 4.92%-5.12% economic growth by the end of 2016, due to the stagnant household consumption and the low government expenditure.
The effect of Iedul Fitri had gone
Economist at Bank Central Asia (BCA) David Sumual also saw that household consumption in the third quarter is slower than the previous quarter due to exhaustion of the effects of shifting the harvest season, Iedul Fitri festival, and fasting month. "In the third quarter, credit growth continued to fall," he said. Therefore, he corrected predicted economic growth in the third quarter, from 5.1% to 4.9%.
An Rp 137.6 trillion cuts in government also contributed to the slow economic growth by the end of September. Investment performance during the period, which is reflected in gross fixed capital formation (GFCF), is also slower.
A similar sentiment was expressed by a number of other economists, such as Leo Putera Rinaldy, Josua Pardede, Juniman, and Eric Sugandi. They predict that the slow economic growth was caused by the slow credit growth, as well as the ratio of household consumption, which have returned to normal level after Iedul Fitri festival.
However, according to Josh, the household consumption may remain stable, despite of the slower trend. "Retail sales grew positively, while there was improvement in automotive sales”, said Josua. Unfortunately, the performance of exports has tended to fall.
Gundy Cahyadi has different opinion. He was not too concerned with the impact of government spending cuts, thanks to the additional revenues from tax amnesty program. He projected that economy grew by 5% by the end of September.
(Muhammad Farid/Translator)
