The Indonesian economic grew by 5.02% in the third quarter of 2016, faring no better than the previous quarter’s growth of 5.18%, as reported by nusantaranews.co.
Believed to have been affected by a decreasing trade value and export, the economic growth did not meet government’s target of 5.2%.
On such target, Finance Minister Sri Mulyani had previously warned that Indonesia should be realistic in setting up economic growth target.
The minister is in the opinion that Indonesia could only reach 5.0% to 5.1% of growth as a results of an increasing interest rates set by the US central bank – the Fed – and Superior Energy Services (SPN).
Nonetheless, despite a slowing economic growth in the last quarter, Indonesia performed better compared to neighboring countries. China’s reported economic growth was stagnant at 6.7% in the same quarter, while Singapore’s growth slowed down from 2.0% to 0.6%.
The non-oil and gas sector had contributed to 17.28% of the of the gross domestic product (GDP) in the third quarter of 2016, as reported by Republika. Among them, four subsectors that formed the significantly contributed to the non-oil and gas sector were the food and beverages industry (33.61% contribution), the metal items, computer, electronics, optics, and electrical equipment industries (10.68% contribution), the transportation equipment industry (10.35%), and the chemical, pharmaceutical and traditional medicine industry (10.05%).
From January to November 2016, the non-oil industry has booked $99.65 billion or 76% of the total national export, which is higher than the same period last year. In addition, there is also a 19.6% increase in domestic investment and a 53.6% increase in foreign investment compared to the same period last year. As a result, in August, there was a 1.87% increase of total employment in the industry sector as compared to the same period on the previous year.
Meanwhile for 2017, the Indonesian economy is expected to grow faster than in 2016. But according to Bank Indonesia Senior Deputy Governor Mirza Adityaswara, such growth is affected by the Chinese economy and the US interest rate.
“If we were to talk about the 2017 (economic) outlook, that will depend on two things. First, the Chinese economy; second is the US interest rate. These are the biggest factor that could influence the Indonesian economy,” said Indonesia’s central bank Mirza Adityaswara said as reported by okezone.com.
China’s economic improvement will reportedly increase commodity price, boosting economic growth in Sumatra and Kalimantan, the two regions that depends on both the mining and plantation industries.
Indonesia’s central bank predicts that the economy will grow between 5% and 5.4% in 2017.