Q2 economic growth of 5.27 percent temporary: INDEF

Jakarta (ANTARA News) – Executive Director of the Institute for Development of Economics and Finance (Indef) Enny Sri Hartati said the economic growth of 5.27 percent year-on-year in the second quarter of this year was only temporary.

The Q2 growth was driven mainly by growing household consumption on larger government spending, which is not sustainable in nature, Enny said.

She said she saw a mismatch with increase in consumption not coming with proportional increase in production.

Government spending should serve as a stimulus for bopth productive and consumptive sectors, she added.

“Social assistance to push consumption is all right, but should be parallel with production,” she said.

She said it was possible production did not grow to follow the increase in consumption because the money for labor intensive program was not spent on industrial sector in the country.

Stimulus in spending failed to cause multiplier effect on the production sector, she added.

In addition , there was production kept on stock for failure in sales, she said.

“Ideally, when consumption grows there is an increase in production, but here there was a mismatch. An increase in consumption was followed with a decline in production,” she said.

She said the economic growth in the second quarter of this year would be a burden on economic growth in the third quarter on minimum source of income for consumption.

The economic growth of 5.27 percent in the second quarter of 2018 was relatively strong, the highest in the past several years.

Source: ANTARA News