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Indonesia Economic Growth Accelerates

JAKARTA—Indonesia’s economic growth accelerated in the second quarter from a six-year low as more development projects got off ground thanks to increased government spending.

The official Statistics Agency said Friday the economy grew 5.18% year-over-year during the April-June period, gaining pace from 4.92% in the first quarter. From the previous quarter, Southeast Asia’s largest economy expanded by 4.02% after contracting 0.34% during the first quarter.

The median forecast of 10 economists polled by The Wall Street Journal was for the economy to grow 5.0% year-over-year in the second quarter, and 3.8% over the first quarter.

The agency said government spending rose 6.28% year-over-year in the second quarter, accelerating from 2.93% growth in the first quarter.

Household spending grew 5.04% from a year earlier, picking up from 4.94% growth in the first three months of the year.

Investment growth, however, slid slightly to 5.06% from 5.57% in the first quarter.

The government has introduced measures to make it easier for companies to invest in the country as it looks for other sources of growth, after plunging commodity prices hurt its economy.

Meanwhile, Bank Indonesia has cut borrowing costs by a total of 1 percentage point so far this year and relaxed regulations on commercial-bank lending to help bolster economic growth.

The World Bank expects Indonesia’s economy to grow 5.1% for the entire year, supported by household consumption and government spending. It said the continuity of economic reform that President Joko Widodo launched late last year will help the economy to mitigate slowing global demand and volatility in the global financial markets.

Source: Wall Street Journal