Indonesia Q2 Growth Slows to 5.3% but Beats Market Forecasts

Indonesia Q2 growth slowed from the previous quarter but remained stronger than economists expected, supported by government expenditure and stimulus measures.

Gross domestic product expanded 5.29% year on year during the April-to-June period, exceeding the 5.1% median forecast in a Reuters poll but easing from 5.61% in the first quarter.

Government spending increased 15.97%, partly because of expenditure on civil servants, although this was slower than the 21.81% rise recorded in the previous quarter.

Household and public spending also moderated as the economic boost from the Eid festive season faded.

DBS economist Radhika Rao said stronger public expenditure, government stimulus and limited pass-through from higher global energy prices helped sustain consumption.

Indonesia, Southeast Asia’s largest economy, is targeting annual growth of 8% before 2030, although achieving that objective will require stronger investment, productivity and domestic demand.