2023.11.0608:15:00UTC+00Indonesia GDP Growth At 2-Year Low

Indonesia's economic growth weakened to a two-year low in the third quarter on falling government spending and exports, official data revealed on Monday.

Gross domestic product grew 4.94 percent year-on-year in the third quarter but slower than the 5.17 percent expansion posted in the second quarter, Statistics Indonesia reported.

This was the weakest expansion since the third quarter of 2021 and also below economists' forecast of 5.05 percent. On a quarterly basis, Southeast Asia's largest economy expanded 1.6 percent. The sequential growth was seen at 1.71 percent.

The expenditure-side breakdown showed that household consumption and investment provided upward contributions while government spending and exports were negative contributors to GDP growth.

Household consumption grew 5.06 percent, while government consumption declined 3.76 percent. Gross fixed capital formation posted an annual growth of 5.77 percent. Partially offsetting these gains, exports decreased 4.26 percent and imports dropped 6.18 percent.

Capital Economics' economist Gareth Leather said the economy is performing worse than what the official data suggest.

While the tightening cycle of Bank Indonesia is probably over, concerns about the value of the rupiah mean the risks are tilted towards further tightening, the economist noted. Rate cuts long way off, he noted.

In October, the central bank had raised its benchmark seven-day reverse repo rate by 25 basis points to 6.00 percent. The BI had hiked the benchmark rate by 250 basis points in the latest tightening cycle that began in August 2022.