• The growth forecast for Indonesia, the largest economy in the subregion, is trimmed slightly for 2015 and 2016 as budget disbursement has been below expectations, and as further delays in export recovery are likely.
  • Growth in Indonesia was stable at 4.7% year on year in the third quarter, as in the second. Government spending improved significantly to grow by 6.6% year on year, much higher than in the previous quarter. Expansion in fixed investment was supported in part by the start of several public projects, and household consumption remained robust. As expected, net exports continued their positive contribution to GDP growth, at 1.2 percentage points as in the first half of the year.
  • The rate of capital budget disbursement by the end of 2015 is projected to be slightly lower than the 80%–85% assumed in the Update, curbing growth in the second half slightly more than previously expected. GDP growth in 2015 is now projected at 4.8%, down from the 4.9% projected in September. In 2016, growth is seen accelerating to 5.3%, revised slightly down from the previous projection as export recovery is likely to be further delayed.

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