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Indonesia Q4 Growth Tops Expectations; 2018 Expansion Fastest In 5 Years

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Indonesia's economic growth in the fourth quarter of 2018 exceeded economists' expectations, despite weaker export growth, and the full year growth was the fastest in five years.

Gross domestic product grew 5.18 percent year-on-year following a 5.17 percent increase in the third quarter, figures from the statistical office showed on Wednesday. Economists had predicted 5.10 percent growth.

Full year growth for 2018 was 5.17 percent, which was the fastest since 2013. In 2017, the economy expanded 5.07 percent.

The economy shrunk 1.69 percent quarter-on-quarter in the final three months of the year, after a 3.09 percent expansion in the third quarter.

Private consumption maintained its growth momentum in the final three months of the year, rising 5.08 percent. Investments grew 6.01 percent.

The annual pace of growth in both exports and imports nearly halved in the fourth quarter from the previous three months, to 4.33 percent and 7.10 percent, respectively.

The country's central bank, Bank Indonesia, raised interest rates by a cumulative 175 basis points in six sessions in 2018 as the government tried to lower the current account deficit.

In January, the bank projected national economic growth for this year in the 5.0-5.4 percent range, backed by domestic demand and improvements in the position of net exports.

"With exports set to slow and monetary policy likely to be tightened further, we think activity will drop back over the coming quarters," Capital Economics economist Gareth Leather said.

"We think economic growth in Indonesia will average around 5 percent over the next couple of years, at least according to the official figures," the economist added.

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