Asian Development Bank Cuts Forecast for Economic Growth Indonesia
The Asian Development Bank (ADB) lowered its forecast for economic growth in Indonesia to 4.8 percent year-on-year (y/y) in 2015 and to 5.3 percent (y/y) in 2016 from previously 4.9 percent (y/y) and 5.4 percent (y/y), respectively. In its latest report on Indonesia, the ADB cited that problems related to budget disbursement and the nation’s weak export performance were the main factors to cut its growth projection for Indonesia - for both 2015 and 2016 - by 0.1 percentage point. In September 2015, the ADB had already cut its growth forecast for Indonesia on the back of negative effects of China’s economic slowdown.
Although growth forecasts for Indonesia, the Philippines and Singapore were cut, the Asian Development Bank did not alter its 5.8 percent growth forecast in 2015 for developing Asia.
Bank Indonesia Governor Agus Martowardojo responded to the growth cut saying that the 4.8 percent (y/y) growth pace is still in line with the growth range that has been set by Indonesia’s central bank (4.7-5.1 percent y/y in 2015). Given the current global and domestic weak environment, Indonesia’s growth pace is still solid, he added.
Indonesia's Quarterly GDP Growth 2009–2015 (annual % change):
| Year | Quarter I |
Quarter II | Quarter III | Quarter IV |
| 2015 | 4.72 | 4.67 | 4.73 | |
| 2014 | 5.14 | 5.03 | 4.92 | 5.01 |
| 2013 | 6.03 | 5.81 | 5.62 | 5.72 |
| 2012 | 6.29 | 6.36 | 6.17 | 6.11 |
| 2011 | 6.45 | 6.52 | 6.49 | 6.50 |
| 2010 | 5.99 | 6.29 | 5.81 | 6.81 |
| 2009 | 4.60 | 4.37 | 4.31 | 4.58 |
Source: Statistics Indonesia (BPS)
Martowardojo also commented on Indonesia’s inflation. In the last month of the year, the central bank expects monthly inflation around 0.5 percent due to the impact of Christmas and New Year celebrations. This would imply that annual inflation eases below the 3 percent (y/y) mark. At the end of 2014, Indonesia experienced heavy inflationary pressure due to the subsidized fuel price hike in November 2014. In November 2015, annual inflation stood at 4.89 percent (y/y).
Despite inflation being under control, the central bank of Indonesia still has limited scope to cut its benchmark interest rate (currently at 7.50 percent) as the looming US interest rate hike and quantitative easing programs in Europe and Japan cause high volatility on global markets.
Inflation in Indonesia:
| Month | Monthly Growth 2013 |
Monthly Growth 2014 |
Monthly Growth 2015 |
| January | 1.03% | 1.07% | -0.24% |
| February | 0.75% | 0.26% | -0.36% |
| March | 0.63% | 0.08% | 0.17% |
| April | -0.10% | -0.02% | 0.36% |
| May | -0.03% | 0.16% | 0.50% |
| June | 1.03% | 0.43% | 0.54% |
| July | 3.29% | 0.93% | 0.93% |
| August | 1.12% | 0.47% | 0.39% |
| September | -0.35% | 0.27% | -0.05% |
| October | 0.09% | 0.47% | -0.08% |
| November | 0.12% | 1.50% | 0.21% |
| December | 0.55% | 2.46% | |
| Total | 8.38% | 8.36% | 2.37% |
Source: Statistics Indonesia (BPS)
Inflation in Indonesia and Central Bank Target 2008-2015:
| 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | |
| Inflation (annual percent change) |
9.8 | 4.8 | 5.1 | 5.4 | 4.3 | 8.4 | 8.4 | 2.8¹ |
| Bank Indonesia Target (annual percent change) |
5.0 | 4.5 | 5.0 | 5.0 | 4.5 | 4.5 | 4.5 | 4.0 |
¹ projection Bank Indonesia
Sources: World Bank and Bank Indonesia