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Economy

Indonesia's economic growth misses estimates

2Q GDP grows 5.0% amid weak consumer, government spending

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A woman shops at a supermarket in Jakarta.   © Reuters

JAKARTA -- Indonesia's economic growth in the second quarter came in slightly lower than expectations due to weakness in household and government spending.

The Central Statistics Agency on Monday said gross domestic product increased 5.01% year on year for the April-June period, the same as the first quarter. Economists polled by Reuters had forecast 5.1% growth.

Growth in household spending, which accounts for more than half of total GDP, was 4.95%, nearly flat from the first quarter.

"The middle to upper class, there is no decline in their purchasing power. But there is indication that they hold their spending ... they've been saving more," said Suhariyanto, head of Central Statistics Agency.

Signs of weakness have been visible in second quarter corporate earnings. Sales at Unilever Indonesia, the country's largest consumer goods company, fell 3% year on year after rising 9% in the first quarter.

Economic growth was also dragged down by government spending, which declined 1.9%. Suhariyanto attributed the decline to a delay in payment of bonuses to civil servants, among other factors.

Export growth also slowed to 3.4%. On the positive side, growth in fixed capital formation, which represents investment, picked up to 5.35%.

Economists polled by Reuters see full-year GDP growth at 5.15%, slightly higher than the 5.02% increase in 2016.

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