Indonesia growth rate at 2-1/2 years low

07 May, 2013

Indonesia's economy grew at its slowest pace in 2 1/2 years in the first quarter, hurt by slowing private consumption, lower investment and a contraction in mining services, suggesting the government's projection for the year may be too optimistic.
The announcement on Monday of lower-than-expected gross domestic product growth of 6.02 percent in the January-to-March period follows Standard & Poor's downgrade of Indonesia's outlook last week, to stable from positive, because of concerns over stalling reforms.
The data also complicates the government's policy options, adding pressure to reduce strained public finances even as it faces public resistance to any cuts to popular but expensive fuel subsidies. A Reuters poll of 11 analysts had predicted first-quarter growth of 6.18 percent, and a 1.50 percent rise on a quarterly and seasonally unadjusted basis. The slowdown in the latest quarter compares with 6.11 percent growth in the previous quarter, and underlines the drag on Southeast Asia's largest economy from sharp declines in commodity prices and depressed capital spending as the recovery in the United States and China loses momentum.

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