Jokowi Spends to Support Fragile Indonesian Recovery

Indonesia’s household consumption, a major contributor to GDP, has been growing at a lacklustre rate in recent years because of weak commodity prices and currency devaluations, the Financial Times reported. The latest economic indicators and FT Confidential Research data show signs of recovery, although the overall outlook remains precarious. This situation is likely to drive pro-growth President Joko “Jokowi” Widodo to support households with subsidies, a populist policy that is incompatible with his fiscal reform agenda as he seeks re-election in April next year. Indonesia’s Central Statistics Agency (BPS) revealed this week that the economy grew by 5.06 per cent year on year in the first quarter; the government’s 2018 target is 5.4 per cent. But first-quarter growth was faster than in the previous three years. The BPS data show that there is room for optimism. Household consumption, which contributed 56.1 per cent to GDP in 2017, grew by 4.95 per cent year on year in the first quarter. Read more. (Subscription required.)