AFP, Jakarta :
Indonesia’s economy expanded at its slowest pace for five years in 2014, official data showed Thursday, hit by political uncertainty and weak exports, putting pressure on the country’s new president to deliver much-needed reforms.
Southeast Asia’s biggest economy expanded 5.01 percent year-on-year,the statistics agency said, down from 5.8 percent in 2013, and the weakest pace since 2009, at the height of the global financial crisis.
The figures “help to underline the challenge facing the country’s new president, Joko Widodo, who despite a promising first few months in office faces a tough challenge”, said Gareth Leather, Asia economist from Capital Economics.
Indonesia’s economy, long a bright spot among the Group of 20, has been slowing in recent years as the price of its key commodity exports are hit by weakening demand in regional powerhouse China and other major markets.
With exports subdued, there were also worries about a stubborn current account deficit and the impact of high interest rates put in place to shore up the rupiah, which has tumbled against the dollar in expectations of tighter US monetary policy.
The economy was also dragged by a long-running presidential election, which took six months and two polls and led many firms to hold off investment until a successor was know.
Eyes will now be on Widodo, a reformist and former businessman who won the presidency on a platform of putting the economy back on track by cutting red tape and improving infrastructure.
The former governor of Jakarta wasted little time in cutting huge fuel subsidies-long seen as a weight on growth-saving billions of dollars, which he has pledged to divert to improving ageing roads, ports and railways.
He increased the price of petrol and diesel by more than 30 percent in November. A month later, buoyed by huge falls in global oil prices, he cut the subsidy for petrol entirely.
The leader is also seeking to make life easier for investors, and this month launched a national “one-stop service” for business permits.
Previously, firms often had to seek licences from numerous different agencies and ministries before they could invest, a complex and time-consuming process.
His government has also pledged to plough money into the manufacturing sector, as it seeks to transform the commodity-dependent economy.
Nevertheless, observers point out that huge challenges remain, not least the endemic corruption and vested interests that have in the past hampered attempts at reform in Indonesia.
Indonesia’s economy expanded at its slowest pace for five years in 2014, official data showed Thursday, hit by political uncertainty and weak exports, putting pressure on the country’s new president to deliver much-needed reforms.
Southeast Asia’s biggest economy expanded 5.01 percent year-on-year,the statistics agency said, down from 5.8 percent in 2013, and the weakest pace since 2009, at the height of the global financial crisis.
The figures “help to underline the challenge facing the country’s new president, Joko Widodo, who despite a promising first few months in office faces a tough challenge”, said Gareth Leather, Asia economist from Capital Economics.
Indonesia’s economy, long a bright spot among the Group of 20, has been slowing in recent years as the price of its key commodity exports are hit by weakening demand in regional powerhouse China and other major markets.
With exports subdued, there were also worries about a stubborn current account deficit and the impact of high interest rates put in place to shore up the rupiah, which has tumbled against the dollar in expectations of tighter US monetary policy.
The economy was also dragged by a long-running presidential election, which took six months and two polls and led many firms to hold off investment until a successor was know.
Eyes will now be on Widodo, a reformist and former businessman who won the presidency on a platform of putting the economy back on track by cutting red tape and improving infrastructure.
The former governor of Jakarta wasted little time in cutting huge fuel subsidies-long seen as a weight on growth-saving billions of dollars, which he has pledged to divert to improving ageing roads, ports and railways.
He increased the price of petrol and diesel by more than 30 percent in November. A month later, buoyed by huge falls in global oil prices, he cut the subsidy for petrol entirely.
The leader is also seeking to make life easier for investors, and this month launched a national “one-stop service” for business permits.
Previously, firms often had to seek licences from numerous different agencies and ministries before they could invest, a complex and time-consuming process.
His government has also pledged to plough money into the manufacturing sector, as it seeks to transform the commodity-dependent economy.
Nevertheless, observers point out that huge challenges remain, not least the endemic corruption and vested interests that have in the past hampered attempts at reform in Indonesia.
