/2014/03/27/1529237800p.jpg)
JAKARTA. Indonesia’s gross domestic product (GDP) growth, which slowed sharply to 5.2 percent year-on-year (yoy) in the first quarter of 2014 from 5.7 percent in the fourth quarter of last year, was well below general expectations of 5.6 percent and also the weakest since the 4.3 percent growth experienced in the third quarter of 2009, an expert said.
UOB economic-treasury research analyst, Ho Woei Chen, said despite stronger private consumption and fixed investment growth, the headline number was weighed down by a contraction in net exports.
“The underperformance in exports was largely associated with the implementation of the mineral export ban on nickel and bauxite in January,” he said in a release made available to The Jakarta Post on Tuesday.
The mining and quarrying sector contracted by 0.4 percent yoy during the quarter.
“As a result of the disappointing growth in the first quarter of 2014, we have downgraded our full-year growth forecast for Indonesia to 5.5 percent from 5.8 percent,” Ho said.
“This is at the lower end of Bank Indonesia’s (BI) forecast range of 5.5 – 5.9 percent,” he went on.
It is further said there will be continued pressures on Indonesia’s current account if exports remain sluggish especially since domestic demand was expected to be bolstered by election-related spending.
Indonesia’s trade balance recorded a surplus of US$1.08 billion in the first quarter of 2014, from a deficit of $0.23 billion in the first quarter of last year.
“Our forecast for the current account balance remains unchanged at –2.4 percent of GDP this year compared to –3.3 percent in 2013,” said Ho.
It is also expected that BI will keep its benchmark interest rate and overnight deposit facility rate steady at 7.50 percent and 5.75 percent respectively for the rest of the year. (ebf)
