Bank Indonesia Expects Indonesia's Economy to Grow 5.7% in 2013
Agus Martowardojo, Governor of Indonesia's central bank (Bank Indonesia), stated that the country's economy is expected to grow 5.7 percent in 2013. Bank Indonesia believes GDP growth in the fourth quarter of 2013 to fall below the growth figure realized in Q3-2013 (5.62 percent). Martowardojo said that the government needs to continue measures to improve the country's exports, while trying to curtail imports of oil and gas as domestic demand for fuels remained high, even after the increase in prices of subsidized fuels in June 2013.
If Indonesia's gross domestic product (GDP) will indeed reach 5.7 percent at the end of 2013, it means that the country's economic growth has been slowing since 2011.
Indonesia's Annual GDP Growth 2009-2014 (annual percentage change)
| 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | |
| Gross Domestic Product (annual percent change) |
4.6 | 6.1 | 6.5 | 6.2 | 5.7¹ | 6.0¹ |
¹ indicates forecast
Indonesia's Quarterly GDP Growth 2009–2013 (annual percentage change)
| Year | Quarter I |
Quarter II | Quarter III | Quarter IV |
| 2013 | 6.05 | 5.83 | 5.62 | - |
| 2012 | 6.29 | 6.36 | 6.16 | 6.11 |
| 2011 | 6.45 | 6.52 | 6.49 | 6.50 |
| 2010 | 5.99 | 6.29 | 5.81 | 6.81 |
| 2009 | 4.60 | 4.37 | 4.31 | 4.58 |
Source: Statistics Indonesia (BPS)
Last week, another Bank Indonesia official, Piter Abdullah, said that Indonesia's economy can rebound in 2014 due to the legislative and presidential elections that are held midway that year. Abdullah said that previous elections had supported the nation's economic expansion due to increased government spending. However, Indonesia's economy will need the support of a better international context as well as an improved current account deficit. The estimated current account deficit (CAD) of Indonesia at the end of Q3-2013 is expected to remain high at USD $8 billion from the record CAD of USD $9.8 billion in Q2-2013 (equivalent to 4.4 percent of the country's GDP).
Meanwhile, a Bank Indonesia survey showed that credit growth in Indonesia continues to slow. In Q3-2013, credit growth stood at 20.8 percent, down from 22.3 percent in the previous quarter. In 2012, credit growth was recorded at 23.0 percent. The slowing growth is particularly caused by lower demand for investment and consumption credit. In recent months, Bank Indonesia has gradually raised its benchmark interest rate (BI rate) from 5.75 to 7.25 percent in order to combat high inflation and support the Indonesian rupiah exchange rate which has fallen 17.9 percent against the US dollar in 2013.
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