ECONOMIC PULSE: Gross Domestic Product (GDP) 4Q17 and FY17 February 6, 2018

  • Indonesia’s annual economic growth remained above 5% in FY17 by expanding 5.07%, marginally higher compared to the 5.03% FY16 growth pace, supported by robust Investments or Fixed Gross Capital Formation (+6.15% vs +4.47% in FY16) combined with rebound in Net Export and Government Spending.
  • The FY17 realized Direct Investment (DI) was IDR 692.8 tn, beating the IDR 678.8 tn target set by the government. In fact the government has raised the investment realization target for this year to be IDR 765 tn (+13%).
  • Household Consumption, the biggest component of GDP and accounts for more than 56% of the total, edged down to 4.95% from 5.01% in FY16. As FY17 drew to a close, optimism among consumers grew stronger, bolstered by markedly improved perception on the economic outlook.
  • Meanwhile, exports and imports turned positive after pulling down the overall FY16 growth. Exports grew 9.09%, swinging from -1.57% while imports expanded 8.06%, reversion from a 2.57% slump. Export value rose 16.22% in FY17 after experiencing negative growth in FY12-16. Throughout FY17, deficit in trade balance only occurred in July and December.
  • Government Spending grew 2.14% last year after shrank 0.14%. Traditionally, growth accelerates from the 3Q to the 4Q because the government usually speeds up public spending as the close of the year fast approaching.

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