Indonesia’s second-quarter economic growth beat analysts’ expectations amid President Joko Widodo’s efforts to spur an economy struggling in the wake of a slowdown in China and low commodity prices.
Gross domestic product increased 5.18 percent from a year earlier, compared with a revised 4.91 percent in the first three months, the statistics bureau said in Jakarta on Friday. That exceeded the 5-percent median estimate in a Bloomberg survey of 24 economists.
Widodo, known as Jokowi, oversaw a 36-percent surge in government spending from the previous quarter as he seeks to lift growth from the slowest level since 2009. The president has embarked on an ambitious infrastructure program and launched a tax amnesty aimed at luring back billions of dollars of undeclared income back to Indonesia. The central bank has cut its benchmark rate by a percentage point this year in an attempt to revive lending.
“The outlook for Indonesia’s economy has improved in recent months, raising hopes that the economy could be on the cusp of a sustained recovery,” said Gareth Leather, senior Asia economist at Capital Economics Ltd. in London. “In particular, the passage of a number of reforms including steps to open up more industries to foreign investment as well as tax incentives to encourage more labor-intensive industries to set up in Indonesia has helped boost sentiment.”
The Jakarta Composite Index extended gains after the figures were released, rising 1 percent as of 9:57 a.m. in the city. The rupiah strengthened 0.1 percent to 13,120 a dollar, according to prices from local banks. Indonesian sovereign bonds advanced, pushing the 10-year yield down two basis points to 6.89 percent, Inter Dealer Market Association prices show.
While the data exceeded economists’ expectations and the outlook has improved, the result still remained “considerably below” the 5.8 percent average over the past decade, said Leather.
On a quarterly basis, the economy grew 4.02 percent from the previous three months.
Government spending rose 6.28 percent from a year earlier, while exports declined 2.73 percent. Investment was up 5.06 percent year-on-year while household consumption, which makes up more than half of the economy, rose 5.04 percent.