Indonesia Defends Economic Statistics Against Doubters

(Bloomberg) --

Indonesia's Finance Minister Sri Mulyani Indrawati defended the nation's statistics, saying there was no manipulation of the economic growth figures after some analysts questioned the unusual stability of the data.

“The government never intervenes in the statistics,” Indrawati said in a phone interview from Dubai on Wednesday. Statistics Indonesia, known as BPS, is independent and “quite reputable,” she said.

Data on Tuesday showed the economy expanded 5.02% in the third quarter from a year ago, little changed from 5.05% in the second quarter and 5.07% in the first three months of the year. Growth has been fairly steady around 5% for several years, prompting some economists, including Gareth Leather of Capital Economics Ltd., to question the figures.

Indonesia's Steady Economic Growth Leaves Economists Puzzled

Indrawati said growth has held above 5% in recent years because household consumption, which accounts for 56% of the economy, has been growing more than 5%. With imports sharply contracting in the third quarter, net exports turned positive, boosting overall growth, she said.

The minister said she's encouraged BPS to invite global institutions to review its methodologies, and there are probably consumption activities taking place online that aren't being captured in the data.

“We are very open, we are very transparent about data, and we have never had a track record of fabricating data, whether in terms of inflation, GDP or unemployment,” she said. “Indonesia, in this era of openness, it's impossible for us to think about fabricating the data.”

The questions raised by some analysts about the nation's statistics are unreasonable and would “erode the confidence of our economic growth and policies,” the minister said. “I take it very seriously.”

Growth Outlook

She said the economy will probably expand 5.05% this year, down from a revised forecast of 5.08%. Interest rates are also still attractive compared to low yields elsewhere, making Indonesia a favored destination for foreign investors, she said.

The minister said she was concerned by the slowdown in investment and government spending last quarter, as well as the contraction in imports, which may indicate a drop in capital goods purchases and therefore, a further slide in investment. Growth may rebound in the fourth quarter with the new cabinet under President Joko Widodo expected to accelerate government spending, she said.

“Based on seasonal pattern, consumption will be more positive in the fourth quarter,” she said. “And we expect there will be more positive responses in investment with the presence of a new government.”

Indrawati also spoke about the outlook for stimulus, investment and spending:

• Government spending may grow 6% to 8% this year with the ministries of transport and public works expected to speed up budget spending
• Investment may be buoyed by the new government as already seen in the pick-up in FDI in the third quarter
• Previously announced stimulus such as super tax deduction for training and research yet to show results and new incentives like an omnibus law on taxation will have a positive impact
• The government is committed to “guard overall growth so that the incentives can match the confidence with a healthy economic growth” expected by investors

To contact the reporter on this story: Viriya Singgih in Jakarta at vsinggih@bloomberg.net

To contact the editors responsible for this story: Nasreen Seria at nseria@bloomberg.net;Thomas Kutty Abraham at tabraham4@bloomberg.net

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