Boston, MA -- (ReleaseWire) -- 04/15/2014 -- We continue to see Indonesia undergoing an adjustment processs, which will see lower growth on the short term, as the authorities seek to cool and rebalance an economy that had overheated. Quarterly growth was below expectations in Q313, but then above expectations in Q413. Despite this fluctuation the economy in our view remains on a slight downtrend as efforts are made to narrow the current account deficit, squeeze out inflation, and tighten monetary policy. For full-year 2013, GDP growth was 5.8%, the lowest level in four years. We are forecasting a further slowing to 5.4% GDP growth in 2014 (no change compared to our last quarterly report), picking up to 6.5% growth in 2015.
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For this year private consumption growth will slow, government spending is likely to increase (this is an election year), investment will fall, and net exports will make a small recovery. Our long-term outlook remains sanguine, with real GDP growth projected to average 6.2% per annum over the coming decade.
Much of this, however, will be driven by strong growth in fixed capital. Should improvements in the investment climate stall or reverse - after all, the country is still ranked at a lowly 120th in the World Bank's Doing Business 2014 report - Indonesia could fail to realise its strong growth potential.
Our shipping and ports forecast for 2014 shows a significantly slower pace of growth, as the economy slows. This slowdown will be partially offset by a recovery in foreign trade, which we expect during the course of the year. Over the medium to longer term we continue to believe that the key to sustainable growth is investment in port infrastructure, including road and rail links in the hinterland areas. We are encouraged to see some evidence of progress on this front.
Headline Industry Data
- 2014 Tanjung Priok total tonnage forecast to grow 5.8% to 56.172mn tonnes, with average annual growth of 5.3% expected over our five-year forecast period to 2018.
- 2014 Palembang total tonnage forecast to grow 4.6% to 12.974mn tonnes, with average annual growth of 3.9% over our forecast period.
- 2014 Tanjung Priok container throughput forecast to grow 7.7% to 7.37mn twenty-foot equivalent units (TEUs), with average year-on-year (y-o-y) growth of 9.1% over our forecast period.
- 2014 Palembang container throughput forecast to grow 4.1% to 109,833 TEUs, with average y-o-y growth of 5.3% over our forecast period.
- Indonesian foreign trade (exports + imports) expected to grow by 5.6% in real terms in 2014, up from 2.3% in 2013.
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