Weak 1Q15 GDP = Cut in 2005 economic growth to 5%

On the back of weak government expenditures, Indonesia’s 1Q15 GDP growth decelerated to 4.71% y-y, down 0.18% q-q, (4Q14: 5.01% y-y; 1Q14: 5.14% y-y), its lowest level since 3Q09 and well below market expectations (exhibit 1). In 1Q15, government expenditures only grew 2.21% y-y (1Q14: 6.12% y-y), followed by private consumption growth of just 4.53% y-y, flat q-q.  

1Q15 private consumption growth, the main economic growth contributor (58% of total 1Q15 GDP), only reached 4.46% y-y (4Q14: 4.53% y-y; 1Q14: 5.61% y-y), as shown in exhibit 2, mainly due to lower purchasing power as result of lower commodity prices coupled with fuel price hikes in 1Q15.

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