Indonesia's 4Q GDP growth slows to weakest in 3 years

  • Economy
  • Wednesday, 05 Feb 2020

The rupiah barely moved after the data was released, trading at 13,715 per dollar at 0430 GMT. There was also a muted reaction in the main stock index.

JAKARTA: Indonesia's economic growth in the final quarter of 2019 was the slowest in three years, hit by a weakening global economy, and despite supportive efforts by policy makers that included four rate cuts by the central bank.

Growth may ease further for Southeast Asia's largest economy this quarter due to the impact of the coronavirus outbreak in China, the country's biggest trading partner and a major source of direct investment.

Indonesia's economy expanded 4.97% on an annual basis in the October-December quarter, data from the statistics bureau showed on Wednesday, slower than expected in a Reuters poll.

For 2019, the economy grew 5.02%, close to the poll's forecast but short of the government's 5.3% target.

Slowing global trade amid the U.S.-China tariff dispute had hurt Indonesia's important commodity exports, while national elections delayed investment decisions.

Household consumption, which accounts for more than half of Indonesia's GDP also slowed, with sales of clothes, mobile phones, cars and motorbikes contracting, Suhariyanto, the head of the statistics bureau, said.

Investment also remained sluggish, despite political uncertainty easing in the October-December period following last year's elections. President Joko Widodo, who won a second term in office, started the term in October.

The rupiah barely moved after the data was released, trading at 13,715 per dollar at 0430 GMT. There was also a muted reaction in the main stock index.

At a separate financial event, ahead of the data, Bank Indonesia (BI) Governor Perry Warjiyo vowed to use all the central bank's tools to support growth. BI last year cut interest rates four times by 100 basis points and eased lending rules in a bid to prop up GDP growth.

"BI will maintain an accommodative macroprudential policy stance and strengthen coordination with other relevant authorities in order to maintain financial system stability and stimulate the bank intermediation function," he said.

The governor forecast a GDP growth rate of 5.3% in 2020, in line with the government's target.

Indonesian authorities have expressed confidence that travel curbs and capital outflows stemming from the virus outbreak that has killed nearly 500 people and infected more than 24,000 others, mostly in China, will not seriously dent Indonesia's economy.

Chinese tourists represent some 13% of total visitors to Indonesia and the country is also the biggest buyer of Indonesian goods, with any deceleration in China's growth likely to affect commodity prices.

A central bank official said on Tuesday that any economic impact in 2020 from the coronavirus epidemic will be small. - Reuters

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