Economic Highlights (Indonesia) - 06/05/2014

Economic Highlights (Indonesia) - 06/05/2014

1Q 2014 Growth Moderated Due To Weak Exports, But Domestic Demand Remained Resilient

¨      Indonesia GDP growth moderated to 5.2% y-o-y in 1Q 2014, from +5.7% in 4Q 2103 and even lower compared with +5.6% in the 3Q. The main cause of the moderation came from a reversal in exports to a contraction in the 1Q, from a growth in 4Q 2013. A pick-up in domestic demand, however, provided some mitigation, on account of higher investment and private consumption.

¨      Almost all sectors recorded slower growth from manufacturing to agriculture; trade, hotel & restaurant and financial, ownership and business services; and transport & communications sectors. These were made worse by a decline in mining & quarrying sector. Meanwhile, growth of electricity, gas and water; and construction sectors held stable during the quarter.

¨      Overall, 1Q 2014 economic growth showed robust domestic demand and the trend will likely remain the same throughout the year. We are of the view that domestic demand will likely be resilient in view of general election events and the optimism over newly formed government. As a whole, we are of the view that real GDP growth will likely moderate to 5.4% in 2014, before staging a rebound to +5.7% in 2015.

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