Construction workers build a new office in Jakarta. Indonesia’s struggling economy grew 4.73% in July-September from a year earlier, the statistics bureau said yesterday.

Reuters
Jakarta

Higher government spending helped Indonesia’s struggling economy grow slightly faster in the third-quarter, but not enough to show a real turnaround has begun.
Southeast Asia’s largest economy expanded 4.73% in July-September from a year earlier, the statistics bureau said yesterday.
That was faster than 4.67% in the previous quarter – the slowest in six years – but below a Reuters poll median of 4.79%.
“Up but not running” was the headline on the data assessment by Wellian Wiranto, economist at OCBC in Singapore.
President Joko Widodo’s administration deployed 50.9tn rupiah ($3.75bn) of capital spending in the third quarter. Investment grew the most since early 2014.
But household consumption, Indonesia’s main driver of growth, decelerated slightly, while export revenue fell and mining shrank.
“Public spending is ramping up, but is not reaching the economy fast enough to boost growth,” said Wai Ho Leong, Barclays’ economist in Singapore. “A lift in sentiment from a rate cut would help.”
Bank Indonesia has a policy meeting on November 17. The data left economists divided on whether it will cut the benchmark rate, at 7.50% since February, to boost growth.
Some say reduced inflation augers for a cut, but others say continued fragility of the rupiah
blocks it.
“I assign a 50-50 probability to a November rate cut and if they don’t do it then, I think they’ll do it in December,” said ING Asia chief economist
Tim Condon.
According to Reuters calculations, Indonesia needs a 5.9% annual expansion in the fourth quarter to get full-year growth near 5%, as sought by Widodo. He has a 5.3 growth target for 2016.
Rising poverty and unemployment are piling pressure on Widodo. Official numbers published Thursday put the August jobless rate at 6.18%, compared with February’s 5.81%.
Widodo emphasized social programmes in his 2014 campaign and pledged to lift growth to an average 7% annually during his five-year term.
In an attempt to improve Indonesia’s investment climate and boost sagging growth, Widodo in September began rolling out stimulus measures.
“The recent flurry of reforms, which includes measures to boost foreign investment, marks a welcome shift away from protectionism and is another step in the right direction,” said Gareth Leather, Asia economist for consultancy Capital Economics.
Still, changes to the business environment “will take time to have an effect on the real economy,” he added.