Adrian Wail Akhlas, Jakarta – Indonesia's economic growth is expected to slow to 4.9 percent in the third quarter of this year as weak global demand affects trade and weakens manufacturing industry, while commodity prices continue to decline, according to a local research house.
"We predict GDP to grow more slowly at 4.9 percent in Q3 2019. We also revise our projection for 2019 as GDP will grow at 5 to 5.1 percent," says the University of Indonesia's Institute for Economic and Social Research (LPEM UI) study on Indonesia's 2020 economic outlook.
LPEM UI's macroeconomy and trade research head Febrio Kacaribu told reporters that the projection was a result of several challenges faced by the country's economy such as lower commodity prices, a weakening manufacturing industry and the trade deficit.
"The prices of the country's top export products, namely palm oil and coal, are lower and the competitiveness of our manufacturing industry has yet to show significant progress," Febrio told a press briefing on the institute's 2020 economic outlook in Jakarta on Monday.
The global trade tension, mainly between the United States and China, hindered the country's exports, he added.
Febrio advised the government to "push for trade and investment" to boost the country's sluggish economy and its World Bank ease of doing business (EODB) ranking. "We must accept that the [existing structural] reform is not sufficient to boost growth," he added.
Indonesia's ranking in the EODB index has remained stagnant at 73rd despite efforts to attract investment by removing unfriendly regulations. It cuts against President Joko "Jokowi" Widodo's target for Indonesia to be ranked 40th next year.
Meanwhile, both the International Monetary Fund and the World Bank have slashed the country's GDP growth to just 5 percent this year, the lowest annual economic growth since 2016.