Indonesia GDP Growth 2018
Indonesia FY18 GDP Growth, Passed
Last year, Indonesia economy grew by 5.17% YoY , the highest since 2014 (see Graph 1). In the last quarter last year (4Q18), the economy recorded a higher private consumption growth at 5,08% YoY (3Q18:5,00% YoY) as a seasonal increase factoring festive seasons in December. While forming an upward trend, private consumption last year grew by 5.05% YoY, lower as compared to the average rate during 2013-2017 of 5,07% (see Graph 2).
Investments expenditure chipped in
At the other end, the country’s investment expenditures grew by 6.67% YoY last year, higher compared to its recent 5 years average of 4.99% (see Graph 3), a difference by 168bp. In the midst of pressure from import (see Graph 4) we argue that investments has guarded the country’s growth to above 5% level (see Graph 5). Investments higher role in the economy for the last 3 years are clear as described in the Graph 6.
Investments expenditure chipped in
Domestic investors have been actively investing in the home country, at IDR328tr last year, representing a 25.3% YoY growth (see Graph 7). Domestic Direct Investments (DDI) has recorded a double digit growth since 2013. Contrast, Foreign Direct Investments (FDI) recorded a declining figure at USD29.3bn, representing a decline of 9% (see Graph 8). As such the DDI share of total investments expenditures in Indonesia economy has been in an increasing trend (see Graph 9).
Investments and Exports are keys
Indonesia economy is by nature a fortunate entity whereby the growth is significantly supported by prudent private consumption and immense natural resource, a number 1 world CPO producer and a number 5 for coal. At the other end, import usually haunted the overall growth performance. Since the event of 1998 crisis both the government and the central bank have been on a better platform to navigate both the monetary and the real sector. This year, the government has projected GDP growth rate at 5,3% .
The immediate future
We believe a gradual effort to enable Indonesia to lower its dependence for the need of raw material and capital goods from other country will significantly leverage growth from the recent levels.