Economy to slow down in Q3: Finance Ministry

Jakarta (ANTARA News) - Indonesia`s economy is expected to grow by less than 5.8 percent during the third quarter, owing to weak consumption as a result of the rupiah`s depreciation and high inflation, a Finance Ministry official said.

"We have seen the tendency and it will be a little below 5.8 percent, but hopefully during the fourth quarter it will recover to meet the target of 5.9 percent set for the end of the year," Bambang Brodjonegoro, the acting head of fiscal policy, revealed.

He added that an increase in budget spending during the fourth quarter, coupled with a predictably improving global economy during the same period was expected to boost economic growth until the end of the year.

"The fourth quarter will indeed be better. Inflation will also be down and will begin to stabilize. Meanwhile, the general elections will not be a factor yet, I think," Brodjonegoro noted.

He added that he was optimistic that the country's economy would grow between 5.8 and 6.0 percent this year because consumption and investment, which are the basis for growth, would be better than five years ago when the financial crisis had hit in 2008.

Bank Indonesia has also lowered the country`s economic growth forecast to between 5.5 percent and 5.9 percent, from an initial expectation of between 5.8 and 6.2 percent.

In domestic terms, the slowdown is a result of the surveys done by Bank Indonesia so far, such as a survey of consumer confidence and retail sales, which revealed that household consumption had declined during the second semester.

Various investment indicators, such as imports of capital goods and sales of heavy equipment, electricity consumption and manufacturing industries and non-construction investment are all expected to contract in the second semester.

The National Statistics Agency reported that Indonesia`s economy grew by 5.92 percent during the first semester, because of which the government has revised its projection to 5.9 percent until the end of the year or lower than the 6.3 percent set in the revised budget.

Finance Minister Chatib Basri had stated earlier that the country`s economic growth would slow down as a result of the government`s policy of stabilizing its current account, which is still in a deficit.(*)