What is 3Q GDP Number Telling You
Indonesia’s 3Q17 GDP slightly increased from 5.01% in 2Q17 to 5.06%, still in-line with BPAM’s forecast of 5.0-5.2% for FY17 (although it’s below consensus forecast 5.19%). If we breakdown by segments, the good data is coming from investment and export. Meanwhile, consumption remain soft.
How about 2018?
We still expect gradual recovery (not V-shape) with better outlook for next year’s GDP of 5.2-5.3% (VS 5.0-5.2% in FY17).
What will be the drivers?
- Consumption, due to stable inflation and more favorable government policy (i.e. no more energy subsidy cut, higher social spending, etc)
- We have seen the good trend in the last 2 quarters, mainly infrastructure (from government budget, but also SOE and private projects) and manufacturing. Meanwhile, utilization from manufacturing sector is relatively high, which may enter reinvestment cycle. This is also supported by improvement in ease of doing business from World Bank’s recent publication.
- Export growth from both price and volume, thanks to synchronized global growth.