Indonesia’s Economic Growth Slows in 2nd Quarter

Indonesia’s economic growth slowed slightly in the second quarter of the year, though data released by the statistics agency Wednesday still beat expectations thanks to strong household and government spending.

Southeast Asia’s largest economy expanded 5.3 percent in April-June, compared with the 5.6 percent seen in the previous three months. It was, however, better than the 5.1 percent projected in a survey of economists by Bloomberg.

Household expenditure, which accounts for more than half of gross domestic product, increased 5.1 percent, Statistics Indonesia official Moh Edy Mahmud said. “Household consumption grew strongly, driven by the momentum (from) holiday and religious holiday” spending, he added.

Government expenditure climbed nearly 16 percent. President Prabowo Subianto’s government is chasing a growth target of eight percent by 2029 as one of its major policy objectives an ambitious goal some experts warn would be hard to reach.

Capital Economics expressed doubt over the growth data. “We remain skeptical of the official figures,” the research company’s senior Asia economist Gareth Leather said in a statement.

“Looking ahead, growth is likely to struggle. Interest rates have been raised aggressively by the central bank, which will weigh on consumption and investment,” he added.