Indonesia on the Verge of Recession, Analyst Says

TEMPO.CO, Jakarta – The national economy experiences another deceleration, with the first quarter of 2015 seeing a growth of just 4.71 percent—the lowest in six years.

University of Indonesia economist Lana Soelistianingsih said that this is an alarm reminding Indonesia that the country could enter a recession period, since the deceleration has been going on for three straight quarters.

The declining growth began after Joko Widodo was sworn in as president in October last year. 2014's third and fourth quarters noted a growth of 5.01 percent, down from quarter one's 5.2 percent and quarter two's 5.12 percent.

To avid recession, Lana suggested the government to accelerate budget absorption and infrastructure development.

Meanwhile, Institute for Development of Economics and Finance (Indef) director Enny Sri Hartati said that to spur growth Indonesia must eliminate several economic hurdles like high interest rates, high transport and logistics costs, as well as the rupiah depreciation.

The country is also facing external factors, said Suryamin, chief of the Central Statistics Agency (BPS). There is the slowdown in China and Singapore—two of Indonesia's main trading partners. There are also the global oil price decline and the declining export value due to low commodity prices.  

Luhut Binsar Pandjaitan, head of the presidential staff office, said the government has not maximized their efforts to increase growth as they are still in a consolidation period. He is certain that a higher growth could be achieved in the third and fourth quarter this year as several budget allocations will be disbursed by then.

Meanwhile, Coordinating Minister for the Economy Sofyan Djalil said the government has made new trade partners including India, Turkey, and several Middle East countries to boost exports until the last quarter of 2015.

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