Indonesia’s economy grew slightly less than estimated in the third quarter as low commodity prices weighed on exports, official data revealed Thursday.
Gross domestic product expanded 4.73 percent in the third quarter from a year ago compared to second quarter’s 4.67 percent growth, Statistics Indonesia said. It was slightly weaker than the expected growth of 4.8 percent.
The annual growth was driven by a stronger increase in government spending, followed by household consumption.
On a quarterly basis, Southeast Asia’s largest economy advanced 3.21 percent, which was also slower than the 4.8 percent rise forecast by economists.
During the first three quarters, the economy expanded 4.71 percent, helped by household spending.
Gareth Leather at Capital Economics expects growth to remain stuck at around 4.5-5 percent over the next few years, ad tight monetary policy and low commodity prices remain a drag on the economy.
Although the central bank is likely to start cutting interest rates soon, the scope for aggressive easing is limited due to concerns about the currency, the economist said.
The central bank had kept its interest rate unchanged at 7.50 percent for eight straight meetings, as it expects inflation to remain at the mid-point of its 3-5 percent target.
Nonetheless, inflation rose to 6.25 percent in October from 6.83 percent in September.
The International Monetary Fund expects the economy to expand 4.7 percent this year and by 5.1 percent in 2016. Inflation is forecast to be 6.8 percent in 2015, which is well above the central bank’s target.
The material has been provided by InstaForex Company – www.instaforex.com