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Indonesia’s economy shrank 1.77 per cent in the fourth quarter.

GDP contracted 1.77 per cent quarter-on-quarter in the three months ended December, dropping from 3.2 per cent growth in the September quarter and close to the median forecast from economists of minus 1.8 per cent.

Year-on-year growth was 4.94 per cent, down from 5.02 per cent in the third quarter and below expectations of 5 per cent.

That brought Indonesia’s annual growth rate to 5.02 per cent for 2016, quicker than the previous year’s rise of 4.79 per cent but still down from a peak of 6.35 per cent in 2007

The latest data come ahead of a tense mayoral election in the capital city of Jakarta on February 15 in which Basuki Tjahaja Purnama, ally of President Joko Widodo, is fighting for reelection while being tried for blasphemy.

They also follow a row with JPMorgan that began when the country’s finance minister lashed out at the US investment bank when it downgraded its rating for Indonesia in early January. The bank subsequently upgraded its outlook from “underweight” to “neutral”.

Indonesian manufacturing activity recently exited contraction in January for the first time in four months, according to the latest reading from Nikkei/Markit’s purchasing managers’ index.

Copyright The Financial Times Limited 2017. All rights reserved.
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