Demand slowdown looms in Indonesia, despite growth

INDONESIA faces the threat of weak domestic demand, despite economic growth in the latest quarter, a regional economist has warned.

South-east Asia's largest market reported 5 per cent year-on-year growth for the third quarter, as forecast, but Merrill Lynch (Singapore) economist Mohamed Faiz Nagutha noted that final domestic demand grew by just 4.4 per cent - its slowest pace in almost three years.

Meanwhile, both private and public consumption softened. That included lower growth of 5 per cent in household consumption, down from 5.2 per cent the quarter before, as goods buys fell.

Citi analyst Helmi Arman also noted in a separate report that the slowdown in consumption growth and government spending hews to the pattern from election years.

Still, Barclays economists Rahul Bajoria and Shreya Sodhani have stood by expectations of 5 per cent growth in 2019 and 2020, which would be "supported by private consumption, though investment is likely to be stagnant in the near term".