World Bank Cuts Indonesia's Economic Growth Forecast to 5.1%

The World Bank has lowered its forecast for Indonesia's economic growth to 5.1 percent, down from the previous estimate of 5.2 percent. One of the reasons is household consumption growth, which is below 5 percent. For context, household consumption contributes more than 55 percent to the national Gross Domestic Product (GDP).

Data from the Central Statistics Agency (BPS) shows that household consumption expenditure grew by only 4.94 percent in the first quarter of 2017 and 4.9 percent in the second quarter. As a result, household consumption grew by only 4.9 percent cumulatively in the first half of the year. Domestic economic growth in the first half of 2017 was only 5.01 percent.

For next year, the World Bank projects domestic economic growth to increase to 5.3 percent, supported by a supportive global economy and stronger domestic conditions. Continued economic reforms, increased private consumption due to rising real wages, and the BI 7-day benchmark interest rate falling to its lowest level can boost the 2018 economy.