Indonesia’s economy lost steam last year as rising government spending failed to compensate for falling exports and lackluster private consumption. While surging government consumption should boost growth this year, high-frequency data suggests other economic drivers are stuck in the doldrums. The trade surplus more than halved in March and growth in real retail sales moderated in February. Meanwhile, the government unveiled its 11th economic stimulus package at the end of March. The latest measures to boost growth include lower taxes on real estate investment and measures to cut red tape at Indonesian ports.
The government’s efforts to kick-start the economy should bear fruit this year and FocusEconomics panelists see GDP accelerating to a 5.1% expansion in 2016, which is unchanged from last month’s forecast. For 2017, the panel sees GDP expanding 5.3%.