Indonesia growth slower than forecast in blow to Widodo

By AFP   May 6, 2016 | 08:45 am GMT+7
Indonesia growth slower than forecast in blow to Widodo
Workers load sacks of cement onto a ship bound for Sambas in Kalimantan island, at Sunda Kelapa harbour in Jakarta, Indonesia May 3, 2016. REUTERS/Beawiharta

Indonesia's growth rate was slower than forecast in the first quarter of 2016, official data showed Wednesday, in a blow to President Joko Widodo's efforts to boost Southeast Asia's top economy.

The G20 economy grew 4.92 percent year-on-year from January to March, the official statistics agency said. This was slightly below economists' forecasts and compared to 5.04 percent in the final quarter of 2015.

The lower-than-expected figure was in part driven by easing investment growth after a "surge" in public spending at the end of 2015, said Gundy Cahyadi, an economist from Singapore's DBS Bank.

"Public investment needs to be sustained to keep up the growth momentum in the economy," he said. 

Widodo took power in 2014 pledging to kick-start the economy after a slowdown caused by falling prices for the resource-rich country's key commodities exports, and slowing exports to key markets such as China.

The economy grew 4.79 percent last year, its slowest pace for six years.

The president has introduced reforms to attract foreign investors by making it easier to do business, tried to ramp up public spending in infrastructure projects and is seeking to boost the manufacturing sector.

The central bank has also cut interest rates three times this year in an attempt to encourage lenders to give out more loans.