* Q1 GDP -0.74% y / y, corresponds to the forecast
* Consumption remains slow
* Government spending grew 2.96% in higher social spending
JACARTA, May 5 (Reuters) – Indonesia’s economy shrank for the fourth consecutive quarter in January-March, but at a much more modest pace, as the government increased spending and higher commodity prices helped exports, they showed. data from the statistics bureau on Wednesday.
Southeast Asia’s largest economy contracted 0.74% in January-March compared to the same period last year, compared to a 2.19% contraction in October-December.
Analysts polled by Reuters predicted a fall of 0.74%, while the country’s Planning Minister expected a fall of 0.6% to 0.9%.
“This shows that the signs of economic recovery will become even more evident. And, of course, we hope that the economic recovery in 2021 may become a reality, ”Suhariyanto, head of the statistics office, said at a news conference.
In the quarterly comparison, without seasonal adjustment, the economy contracted 0.96%, compared to a fall of 0.42% in October-December and projections of a fall of 1.04%.
Consumption, which represents about half of the country’s gross domestic product (GDP), continued to decline compared to the previous year, as consumers remained reluctant to spend on expensive items, such as cars.
Meanwhile, government spending grew 2.96% in the period, said Suhariyanto, as social spending increased.
Indonesia’s economy suffered its first full-year GDP contraction in more than two decades in 2020, when the COVID-19 pandemic and anti-virus restrictions hurt companies and left millions without jobs.
The government injected 579.78 trillion rupees ($ 40.18 billion) into the economy to help mitigate the impact of the coronavirus last year and expanded recovery spending this year to 699.4 trillion rupees from 403.9 trillion rupees. rupees budgeted at the beginning of the year.
Indonesia recorded the highest number of coronavirus infections and deaths in Southeast Asia. The cases have been declining since the peak in January, but the country reported this week that it detected its first cases of a highly infectious COVID-19 variant first detected in India.
Faisal Rachman, an economist at Banco Mandiri, said the economy is moving in the right direction and should improve further in the second half of the year.
“Domestic consumption and fixed investment are expected to accelerate along with increased demand driven by confidence driven by the vaccine and the intensification of transmission of monetary easing due to the higher credit cycle,” he said.
The central bank cut interest rates by 150 basis points, injected more than $ 50 billion of liquidity into the financial system and eased lending rules since the pandemic began to help cushion the impact of the outbreak.
Banco Indonesia expects the economy to grow 4.1% -5.1% this year. It cut its vision last month from a previous forecast of 4.3% -5.3% after seeing that consumption was not recovering as fast as initially expected. ($ 1 = 14,430,0000 rupees)