The hiccup in Indonesia’s third-qua

The hiccup in Indonesia’s third-quarter gross domestic product (GDP) growth — which at 5.02 percent year-on-year (yoy) or 3.20 percent quarter-on-quarter (qoq) was lower than our forecast of 5.26 percent yoy and the consensus forecast of 5.08 percent yoy — will not derail the country’s economic recovery as we head into 2017.

In the third quarter of 2016, weakness was seen in private consumption growth at 5.01 percent (5.06 percent in the second quarter), dragged down by the apparel sector, which only grew by 2.01 percent yoy (as opposed to 3.15 percent yoy in the second quarter).

Equipment growth was also subpar at 4.3 percent yoy (4.91 percent yoy in the second quarter), while the restaurant and hotel sector grew at 4.42 percent yoy (following a growth rate of 5.90 percent in the second quarter).

On the investment front, deceleration occurred with growth coming in at 4.06 percent (in the second quarter, it was 5.06 percent) as machinery continued to shrink at -6.75 percent yoy (-3.62 percent yoy in the second quarter) and vehicles at -2.78 percent yoy (0.76 percent yoy in the second quarter).

Other areas also performed weaker than in the previous quarter, such as government expenditure at -2.97 percent yoy (contrary to 6.23 percent in the second quarter) and net exports at -24.26 percent yoy (contrary to 4.89 percent in the second quarter).

Comparing sectors, financial services and IT grew the fastest at 8.83 percent yoy and 9.20 percent yoy, respectively.

Interestingly, for the first time since 2014, the mining sector saw growth at 0.13 percent yoy (it was -0.09 percent in the second quarter). That said, continued increases in commodity prices, such as in coal, should support higher growth in the mining sector going forward.

On government spending, the Finance Ministry cut the disbursement at -7.3 percent qoq (16.7 percent qoq in the second quarter) due to lower tax revenue recognition prior to tax amnesty receipt.

Looking ahead, we expect to see higher fiscal spending, backed by receipts from the tax amnesty, which reached Rp 98.1 trillion (US$7.48 billion) as of Nov. 6.

It is worth noting that even though the growth of exports in the balance of payment (BoP) recovered to -5.4 percent yoy, (from -8.66 percent yoy in the second quarter), the growth in the GDP dropped to -6.00 percent yoy (-2.42 percent yoy in the second quarter).

Historically, BoP-basis exports have a positive correlation with GDP-basis exports (Diagram 1), but they decoupled in the third quarter. Thus, the recent commodity price increases (Diagram 2) have not yet impacted GDP growth.

On a US dollar basis, Indonesia’s third-quarter nominal growth already jumped 13.1 percent yoy, as the rupiah appreciated 5.5 percent yoy (Diagram 3), supporting Indonesia’s purchasing power, compared to last year’s performance.

Hence, we maintain our GDP growth forecast for 2017 at 5.4 percent, as we look for the positive impact from the revision of the negative investment list, decreasing interest rates, an appreciating rupiah and rising commodity prices to kick in.

Hasil (Bahasa Indonesia) 1:

Cegukan dalam pertumbuhan kuartal ketiga produk domestik bruto (PDB) Indonesia — yang 5,02 persen year-on-year (yoy) atau 3,20 persen kuartal pada kuartal (qoq) adalah lebih rendah daripada perkiraan kami 5,26 persen yoy dan konsensus perkiraan 5,08 persen yoy — tidak akan menggelincirkan pemulihan ekonomi negara sebagai kepala kita ke 2017.Pada kuartal ketiga tahun 2016, kelemahan terlihat dalam pertumbuhan konsumsi swasta 5,01 persen (5.06 persen di kuartal kedua), terseret oleh sektor pakaian, yang hanya tumbuh 2,01 persen yoy (dibandingkan dengan 3,15 persen yoy di kuartal kedua).Peralatan pertumbuhan juga bawah standar di 4.3 persen yoy (4,91 persen yoy di kuartal kedua), sementara restoran dan sektor hotel tumbuh 4.42 persen yoy (setelah tingkat pertumbuhan 5,90 persen di kuartal kedua).Di depan investasi, perlambatan terjadi dengan pertumbuhan yang datang di 4,06 persen (di kuartal kedua, itu adalah 5.06 persen) sebagai mesin terus menyusut di-6.75 persen yoy (-3.62 persen yoy di kuartal kedua) dan kendaraan di-2.78 persen yoy (yoy 0,76 persen di kuartal kedua).Daerah lain juga dilakukan lebih lemah dari kuartal sebelumnya, seperti pengeluaran pemerintah di-2.97 persen yoy (bertentangan dengan 6.23 persen di kuartal kedua) dan bersih ekspor di-24.26 persen yoy (bertentangan dengan 4.89 persen di kuartal kedua).Membandingkan sektor, Jasa Keuangan dan tumbuh tercepat di 8.83 persen yoy dan 9.20 persen yoy, masing-masing.Menariknya, untuk pertama kalinya sejak tahun 2014, sektor pertambangan melihat pertumbuhan 0,13 persen yoy (itu adalah-0.09 persen di kuartal kedua). Yang mengatakan, terus kenaikan harga komoditas, seperti batu bara, harus mendukung pertumbuhan yang lebih tinggi di sektor pertambangan yang maju.Pada pengeluaran pemerintah, Departemen Keuangan memotong pencairan di-7.3 persen qoq (qoq 16,7 persen di kuartal kedua) karena pengakuan pendapatan pajak rendah sebelum penerimaan amnesti pajak.Ke depan, kami berharap untuk melihat lebih tinggi pengeluaran fiskal, didukung oleh penerimaan dari amnesti pajak, yang mencapai Rp 98,1 triliun (US$ 7,48 milyar) pada 6 November.It's worth dicatat bahwa meskipun pertumbuhan ekspor dalam keseimbangan pembayaran (BoP) pulih untuk-5.4 persen yoy, (dari-8.66 persen yoy di kuartal kedua), pertumbuhan PDB turun menjadi-6.00 persen yoy (-2.42 persen yoy di kuartal kedua).Secara historis, BoP-dasar ekspor memiliki korelasi positif dengan PDB-dasar ekspor (Diagram 1), tetapi mereka dipisahkan pada kuartal ketiga. Dengan demikian, kenaikan harga komoditas terakhir (Diagram 2) tidak belum berdampak pertumbuhan PDB.Secara US dollar, Indonesia kuartal ketiga nominal pertumbuhan sudah melompat 13.1 persen yoy, sebagai rupiah dihargai 5,5 persen yoy (Diagram 3), mendukung daya beli Indonesia, dibandingkan dengan tahun lalu kinerja.Oleh karena itu, kami menjaga pertumbuhan PDB kita forecast untuk 2017 di 5,4 persen, seperti kita melihat untuk dampak positif dari revisi daftar negatif investasi, penurunan suku bunga, rupiah menghargainya dan meningkatnya harga komoditas untuk menendang.