(MENAFN- The Peninsula) Indonesian growth slipped below six percent last quarter as exports and investment fell in Southeast Asia's top economy due to global weakness, official data showed yesterday.
The figures highlighted the challenge for policy makers as they seek to maintain strong growth while battling a surge in inflation sparked by a fuel price hike and stopping recent steep falls in the rupiah. GDP was 5.81 percent in the three months to the end of June year-on-year, below economists' expectations, according to data from the Central Statistics Agency.
This compared to 6.02 percent in the January to March quarter.
"The global economy is slowing, so Indonesia is also slowing," said statistics chief Suryamin.
Long a bright spot in the global economy, Indonesia's growth has been weakening as demand for its major commodity exports, such as coal and palm oil, has slowed, particularly from powerhouse China.
The country's trade deficit widened to $850m in June from $590m in May due to weak demand for exports, according to official data released this week.
Suryamin also said that investment was experiencing a slowdown, and Credit Suisse noted investment growth slipped to a three-and-a-half-year low in the second quarter. But the central bank has little room to loosen monetary policy as it seeks to keep a lid on surging inflation that threatens to dent consumer spending, a key motor of the Indonesian economy as the middle class rapidly expands.
Inflation hit a four-year high in July after the government raised the price of fuel by up to 44 percent. Bank Indonesia hiked its key interest rate by 75 basis points at its last two meetings to keep a lid on rising prices.
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