The momentum of economic recovery should be maintained to achieve the economic growth targets in 2018 and succeeding years.
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Kompas/Raditya Helabumi
Manufacturing industry players participating in the Manufacturing Indonesia 2017 exhibition at Jakarta International Expo, Jakarta, Wednesday (6/12). The manufacturing industry has contributed to the national economic growth. The exhibition, participated by industry players from home and abroad, will be held until Saturday.
JAKARTA, KOMPAS – Economic growth in the fourth quarter of 2017 is expected to be 5.1 percent to 5.2 percent. The momentum of economic recovery should be maintained to achieve the growth targets in 2018 and succeeding years.
Household consumption, which accounts for 55-56 percent of the gross domestic product (GDP), is projected to increase from 4.93 percent in the third quarter to 5 percent in the fourth quarter. The estimated increase is due to a number of factors, including the yearend holiday season, during which household spending usually increases.
The encouraging investment and export growth in the third quarter is expected to continue into the fourth quarter, while government spending will peak in the fourth quarter according to the annual cycle.
"With these factors, combined with low inflation and sufficient liquidity, we expect 5.1 percent economic growth in the fourth quarter of 2017. In fact, I hope it will be more than 5.2 percent. Thus, the momentum of recovery in economic growth should be maintained further," Finance Minister Sri Mulyani Indrawati said on Thursday in Jakarta.
Investment will drive economic growth to over 6 percent in the coming years, said Sri Mulyani, adding that the government\'s commitment to improving the investment climate through various policies was expected to further increase investment.
"In addition to investment, exports are also expected to grow. That will be the government\'s focus to achieve 6 percent growth in the medium term," she said.
As for the stage of economic development, Sri Mulyani said it had actually leapfrogged in the fields of telecommunications, transportation, trade, banking and financing, partly due to the growth of tourism and urbanization.
"Indeed, services will be the main driver. The challenge in Indonesia is that services should not be of low quality, but should have high productivity," she said.
UOB Indonesia chief economist Enrico Tanuwidjaja estimated that economic growth would reach 5.1 percent this year and 5.3 percent in 2018.
The estimated moderate growth, Enrico said, was partly due to several factors. In addition to external factors, the government was also being slightly more conservative in state budget spending because of the cut in this year\'s fiscal deficit target.
Enrico said that private sector spending also declined as many companies held back plans for expansion or new investment. The planned tax rate cuts in the United States would also greatly impact corporate business plans.
Optimism
Separately, Indonesian Chamber of Commerce and Industry (Kadin) chairman Rosan Perkasa Roeslani said that the optimism for economic growth in 2018 was caused in part by export growth and more stable commodity prices.
Historically, Indonesia\'s economy experienced high growth when commodity prices rose. However, Rosan said the current condition was less than ideal. He said it would be good if growth in domestic consumption could be maintained in 2018. "However, the main drivers of economic growth will be our investment and exports," he said.
Speaking of investment, Rosan said that a series of government policies to streamline businesses could attract investors to Indonesia’s industrial sector. However, the inconsistency between the central government’s policies and those of local governments could hamper new investment. The government has published 16 economic policy packages so far.
Meanwhile, a Sampoerna University study has found that Indonesia’s GDP will grow between 5.17 percent and 5.24 percent in 2017, driven mainly by government spending and investment. Compared to global economic growth, those figures are considered good. However, growth is not yet optimal with regard to the country’s economic potential.
"Global economic growth is around 3.6 percent. We can grow about 5.1 percent. Compared with our potential, this is still quite low," the Management Studies Program head at Sampoerna University’s business school, Wahyoe Soedarmono, said during Thursday’s seminar on Economic and Financial Sector Outlook 2018.
According to Wahyoe, exports, investment, and consumption can still be improved as drivers of economic growth.
