Indonesian GDP Growth and Inflation Expected to Slow further
The pace of economic growth of Indonesia is expected to remain below five percent year-on-year (y/y) in the second quarter of 2015 according to Reuters poll involving 22 analysts. In fact, the poll shows that further slowing economic growth is expected. In the first quarter of 2015, Indonesia’s economic growth came at 4.71 percent (y/y), the weakest growth pace in six years. According to the poll, analysts see a gross domestic product (GDP) growth rate of 4.61 percent (y/y) in the second quarter of 2015.
Meanwhile, the central bank of Indonesia (Bank Indonesia) said it expects economic growth in Q2-2015 to be flat from growth recorded in the preceding quarter. Regarding full-year growth, Bank Indonesia still upholds the optimistic target range of 5.0 - 5.4 percent (y/y), higher than the result in the Reuters poll (4.9 percent full-year 2015 GDP growth).
Most analysts expect to see improved economic performance in the second half of 2015. This is mostly based on expected acceleration of government spending, particularly infrastructure spending. Statistics Indonesia will release the official GDP growth figure at the start of August.
Indonesia's Quarterly GDP Growth 2009–2015 (annual % change):
| Year | Quarter I |
Quarter II | Quarter III | Quarter IV |
| 2015 | 4.71 | |||
| 2014 | 5.14 | 5.03 | 4.92 | 5.01 |
| 2013 | 6.03 | 5.81 | 5.62 | 5.72 |
| 2012 | 6.29 | 6.36 | 6.17 | 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)
Meanwhile, Bank Indonesia Governor Agus Martowardojo announced to expect Indonesia’s July inflation to fall slightly to 7.13 percent (y/y), from 7.26 percent (y/y) in the preceding month. On a monthly basis, Indonesian inflation may rise 0.8 percent in July. Despite inflationary pressure caused by the Ramadan month and Idul Fitri celebrations, inflation was manageable, possibly due to diminished purchasing power and good government monitoring (keeping track of price volatility of key commodities). Martowardojo said Indonesian authorities need to monitor food supply and demand in the period ahead to guard against the impact of the El Nino weather phenomenon.
Inflation in Indonesia:
| Month | Monthly Growth 2013 |
Monthly Growth 2014 |
Monthly Growth 2015 |
| January | 1.03% | 1.07% | -0.24% |
| February | 0.75% | 0.26% | -0.36% |
| March | 0.63% | 0.08% | 0.17% |
| April | -0.10% | -0.02% | 0.36% |
| May | -0.03% | 0.16% | 0.50% |
| June | 1.03% | 0.43% | 0.54% |
| July | 3.29% | 0.93% | |
| August | 1.12% | 0.47% | |
| September | -0.35% | 0.27% | |
| October | 0.09% | 0.47% | |
| November | 0.12% | 1.50% | |
| December | 0.55% | 2.46% | |
| Total | 8.38% | 8.36% | 0.96% |
Source: Statistics Indonesia (BPS)
Inflation in Indonesia 2008-2014:
| 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | |
| Inflation (annual percent change) |
9.8 | 4.8 | 5.1 | 5.4 | 4.3 | 8.4 | 8.4 |
Source: World Bank