Roundup: Indonesia upbeat about recovering growth in Q2 after poor showing in Q1

Indonesia is upbeat about seeing a over-5 percent-growth in the second quarter this year as a new target has been set by the government after it recorded poor showing of 4.7 percent in the first three months this year due to minimum spending of state budget throughout the period.

The second quarter target was disclosed by Indonesian Vice President Jusuf Kalla, who said that plans to accomplish the target should immediately be discussed by related ministries under the coordination of finance minister, supported with acceleration of budget channeling process.

"So it has to be more than 5 percent. Further discussions coordinated by finance minister need to be conducted to take the future steps," Jusuf said in his office here on Wednesday.

The weakening growth in the first quarter this year was caused by the incapability of government's ministries and agencies to spend the budget, the central bank said in its statement.

A legislator from Commission XI in the parliament tasked to supervise the government's financial policies said that government has yet to settle discussions with the parliament related to technical guidance to distribute the state budget.

"That is why its routine spending, as well as expenditure to acquire capital goods for the infrastructure projects, were yet to be channeled," Misbakhun, the legislator from Golkar Party said on Wednesday.

The growth figure in the first quarter this year was lower than 5.21 percent it posted in the same period last year, while in the following period the nation posted a 5.12 percent growth.

Head of Indonesian Central Statistic Bureau (BPS) Suryamin said the nation's economy downturn in the first quarter this year was caused by various factors.

In the production section, the growth in the first quarter was exacerbated by production decreases in food production, crude oil and coal sectors that eventually halted the manufacturing industry, according to Suryamin.

"The following factor was distribution slowdown in trade sector due to decreasing import that included capital goods, raw material goods and consumption goods," Suryamin said in his office on Tuesday.

He said that import reduction in the first quarter was recorded at 2.2 percent if compared to the same period last year and 9.98 percent if compared to the previous quarter.

The fourth production factor was the construction sector hindered by the unmaterialized allocation of infrastructure budget, he added.

Slowing household and government spending also contributed to the growth slowdown, added by exacerbated exports due to commodity price reduction in global market and economy downturn in Indonesia 's export destination countries.

Besides that, in service and hospitality sector, Indonesia also recorded poor showing as foreign tourist visit grew in insignificant level, worsened by reduction of the tourists' average spending during their stay in the country. Endi