Bank Indonesia predicts 5.15pc growth in Q2

Published: May 26, 2018 15:36:40 | Updated: May 29, 2018 14:10:15

Bank Indonesia (BI), the central bank of the largest economic country in Southeast Asia, has predicted 5.15 per cent economic growth in the second quarter.

The economic growth in the second quarter this year may reach up to 5.15 per cent on the back of rising consumption, Indonesian central bank governor said on Friday.

The bank said the rising consumption was prompted by the upcoming distribution of Idul Fitri bonus and extra annual salary for civil servants, military, police and state retirees, reports Xinhua.

BI Governor Perry Warjiyo said the Q2 growth projection was higher than 5.06 per cent attained in the Q1 and in the same period in 2017 that stood at 5.01 per cent.

Warjiyo said the distribution of the upcoming Eid bonus and the extra annual salary, popularly known as the 13th salary, would significantly propel household consumption during the Eid holiday season in June.

The consumption surge during the holiday season would be facilitated by mild annual inflation that stood at 3.41 per cent by April this year, holding back the prices of staple needs from increasing steeply during the festivity season, BI Governor said.

Besides stimulating the consumption, Warjiyo said distribution of the extra salary and the Idul Fitri bonus would eventually increase contribution of government spending to the economic growth.

This situation would become a fiscal stimulus in the second quarter, he pointed out.

The government has allocated some 35.76 trillion rupiah (about $2.50 billion) for the civil servants, military, police and state retirees bonus and extra salary, which would be distributed in early June and July this year.

Indonesia has set target to see 5.4 per cent growth in 2018, slightly higher than last year’s 5.07 per cent target.

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