Indonesia full-year GDP growth seen at 5.1 pct following slightly underwhelming 1Q17 GDP data: DBS Bank

The full-year gross domestic product (GDP) of Indonesia is seen at 5.1 percent, down from the earlier forecast of 5.3 percent, given the slightly underwhelming GDP data for the first quarter of this year. Sustained strength in export growth and continued stability of the rupiah are set to have a positive impact on the outlook for overall GDP growth, DBS Bank reported.

The country’s GDP growth came in at 5.0 percent y/y in Q1 2017. While this was a tick higher than the 4.9 percent seen in 4Q16, there was no sign that the economy has accelerated in any meaningful way. Export growth at 8 percent, highest in 3 years, was presumably he most exciting bit from the Q1 2017 data.

That the manufacturing sector continued to grow at a steady pace of 4.2 percent means that commodities were still the main driver of export growth in the period. Compared to the 15 percent average of export growth in 2010-11 (before the plunge in commodity prices), the 8 percent print in Q1 2017 was nothing to brag about.

Meanwhile, any fiscal boost from the government will be crucial, given that signs have been mixed for the outlook on private investments so far this year. Investment growth was unchanged at 4.8 percent in 1Q17. While making up around 35 percent of the GDP, the contribution from investments to overall GDP growth remains slightly lower at circa 30 percent, the report added.