February 1, 2019 / 7:02 AM / 15 days ago

Indonesia's GDP growth seen slowing slightly in fourth quarter: Reuters poll

JAKARTA (Reuters) - Indonesia’s economic growth rate likely slowed slightly in 2018’s final quarter, but the full-year pace was probably the best in five years, a Reuters poll showed on Friday.

A tug boat as seen near a stack of containers at Tanjung Priok port in Jakarta, Indonesia, November 5, 2018. REUTERS/Beawiharta

The median forecast from 16 economists was for expansion of 5.11 percent in October-December, fractionally less than the third quarter’s 5.17 percent annual rate.

For all of 2018, Southeast Asia’s largest economy likely grew 5.15 percent, according to the poll. That would be the fastest since 2013 and above 2017’s 5.07 percent.

Wednesday’s GDP report will be the last before April 17 general elections, and will show that the annual growth rate has hovered around 5 percent during the five-year term of President Joko Widodo, who could not fulfill a pledge to raise the pace to 7 percent.

Widodo, who is seeking a second term, is opposed by former general Prabowo Subianto.

Finance Minister Sri Mulyani Indrawati said 2018 was “not an easy year” given market turbulence rooted in interest rate hikes in the United States and Washington’s trade war with China.

She has called the government’s 5.17 percent growth prediction for 2018 “a testament to Indonesia’s economic resilience”.

In 2018, the rupiah currency plunged to the weakest in 20 years before recovering towards year-end.

To combat capital outflows, the central bank raised interest rates six times by 175 basis points. Widodo’s administration took a series of measures to curb imports and support the rupiah in the face of sizable trade and current account deficits.

Rahul Bajoria, Singapore-based economist at Barclays, said moderation in fourth quarter growth reflected its large trade deficit stemming from poor exports and high imports.

Economists expect it will be challenging to raise the growth rate this year, especially with global growth slowing and large uncertainties including how deep China’s slowdown will prove and whether there can be an agreement resolving the U.S.-China trade war.

Giving some help should be election-campaign spending, which could boost consumption, while newly-completed infrastructure projects, such as a subway in Jakarta, could boost productivity.

The government has a 5.3 percent target for this year, but Indrawati sounded a downside warning, noting the trade war, Brexit and China’s economic slowdown.

“We’re not worried, but we must be alert. These are the risks for 2019,” she said.

Reporting by Nilufar Rizki, Maikel Jefriando and Gayatri Suroyo; Editing by Richard Borsuk

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