Indonesian quarterly growth slowest since 2010

Workers erect an iron reinforcement column at a high rise office construction site in Jakarta on Monday, May 6, 2013. The Indonesian economy expanded by 6.02 percent in the first quarter, official data showed Monday, the slowest pace for more than two years as exports fell due to the weak global economy. AFP PHOTO/ROMEO GACAD

JAKARTA—Indonesia’s economy expanded by 6.02 percent in the first quarter, official data showed Monday, the slowest pace in more than two years as exports fell due to the weak global economy.

It was the slowest quarterly, year-on-year growth in Southeast Asia’s biggest economy since the third quarter of 2010 and came in below forecasts. The economy grew 6.11 percent in the fourth quarter of last year.

Exports fell by 4.33 percent compared to the previous quarter, according to the statistics agency. Economists attributed the slowing growth to a fall in demand for commodities.

Indonesia is the world’s biggest producer of palm oil—found in a wide variety of everyday goods from soap to cosmetics and biscuits—and also a major exporter of coal, tin and rubber.

Many firms were experiencing “lower demand for commodities, not only in Europe and the US but in China as well,” said Bank Danamon Indonesia chief economist Anton Gunawan.

Nine economists surveyed by Dow Jones Newswires had forecast first quarter growth of 6.10 percent.

Last month, concerns about the weak recovery in the global economy led the central bank to lower its growth forecast for this year to 6.2-6.6 percent from 6.3-6.8 percent.

The economy grew 6.23 percent in 2012.

Despite the slight slowdown, Indonesia still has one of the best growth rates in the world, driven by strong domestic consumption and high levels of foreign investment.

Monday’s data will reduce the likelihood of the central bank hiking interest rates anytime soon from 5.75 percent, where they have been for more than a year, analysts said.