Indonesia GDP Growth Tops Expectations

(RTTNews) - Indonesia's economy expanded at a faster-than-expected pace in the first quarter on the back of robust household spending and foreign demand, official data revealed on Friday.

Gross domestic product grew 5.03 percent on a yearly basis in the first quarter, following the fourth quarter's 5.01 percent expansion in the preceding period. The rate was also faster than economists' forecast of 4.95 percent. Moreover, the latest figure marked the eighth straight quarter of expansion.

On a quarterly basis, GDP declined 0.92 percent, in contrast to the 0.36 percent growth in the fourth quarter. This was the first decline in a year. GDP was expected to fall 1.0 percent.

Economic growth was broad-based with all components providing positive contribution to growth.

Nonetheless, annual growth was largely driven by the 4.54 percent expansion in household consumption. Government spending grew 4.0 percent and capital formation rose moderately by 2.11 percent. Exports posted a sharp annual increase of 11.7 percent, while imports gained only 2.8 percent.

The central bank forecast Southeast Asia's largest economy to expand in the range of 4.5 to 5.3 percent this year. Bank Indonesia forecast private consumption to strengthen amid rising consumer confidence and stronger purchasing power given lower inflation.

Inflation has slowed to an 11-month low of 4.33 percent in April from 4.97 percent in the previous month. The central bank aims to bring inflation to the target of 2-4 percent.

"Given our outlook for slowing inflation, a stable currency and potential central bank easing, we may consider adjusting our full-year growth forecast of 4.6%YoY upwards," ING said.