In the first quarter of 2015, the economic growth of Indonesia increases at 4.7%. This is not good news because it is lower than the target. In fact, in 2014, Indonesia economic growth was above 5% in each quarter. Nevertheless, other countries also experience economic growth slowdown in first quarter of 2015. For Indonesia itself, there are many factors cause the slowdown of economic growth. This essay aims to describe two factors that cause slowdown of Indonesian economic growth.
First, government has yet to use its budget to finance infrastructure development and capital expenditure. Mr. Joko Widodo has set target to develop infrastructure as the first priority in order to achieve seven percent economic growth in next five year. The development of infrastructure spends a lot of money and provides many job fields. Thus, this sector can increase economic growth significantly, and also decrease unemployment rate.Moreover, good infrastructure like road, bridge, and so forth can stimulate region economy which will contribute to the economy growth of Indonesia.
Second, price of several primary commodities export falls gradually. The slowdown of economic growth of some countries affects the demand for commodities from Indonesia, in which demand of those commodities drops gradually. This causes the falling both export value and price of the commodity itself. Consequently, the performance of industries and income of society drops gradually and decrease consumption rate of the society. On the other hand, the falling of performance of industries and income of society causes slowdown of loan growth of Indonesian banks.
To sum up, Indonesia economic growth in first quarter in 2015 is lower than the target. The slowdown of Indonesia economic growth is caused by many things. First, government has not used its budget to finance development of infrastructure and capital expenditure. Second, the value of several primary commodities exports drops gradually. To achieve economic growth at 5.7% at the end of 2015, government should enhance its performance, if not, the economic growth target will not be achieved.
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