Indonesia's economy grew at the slowest pace in five years in 2014 on weaker exports, signaling the challenges that President Joko Widodo face to cushion growth amid falling commodity prices and subdued investment.
Gross domestic product grew 5.02 percent in 2014, the weakest since 2009, data from the Statistics Indonesia revealed Thursday. A year ago, the economy expanded 5.58 percent.
Southeast Asia's largest economy is forecast to grow by 5.5 percent in 2015.
In the fourth quarter, the economy grew 5.01 percent from last year, the same as in the prior quarter and slightly faster than an expected 4.9 percent.
Quarter-on-quarter, GDP shrank 2.06 percent, which was worse than a 1.48 percent fall forecast by economists.
Growth is unlikely to slow any further from here, Gareth Leather, an Asian economist at Capital Economics, said. But a rebound is not expected in the short-term with weak commodity prices and high interest rates set to weigh on economic activity.
On the expenditure side, household spending gained 5.01 percent and government spending rose 2.83 percent in the fourth quarter from last year. Investment advanced 4.27 percent. Exports declined 4.53 percent, while imports grew 3.22 percent.
In January, the manufacturing sector contracted for four consecutive months on weak output and orders, according to Purchasing Managers' survey. Su Sian Lim, an ASEAN economist at HSBC said the central bank is likely to keep its monetary policy settings unchanged over 2015.
Bank Indonesia raised its key interest rate at a special meeting in November in response to the government's decision to raise fuel prices. It was the first rate hike in a year.
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