Indonesia's GDP expands 5.81% year-on-year in Q2, below forecast

A vendor receives cash from her customer at a street market in Jakarta on July 1, 2013. -- FILE PHOTO: REUTERS
A vendor receives cash from her customer at a street market in Jakarta on July 1, 2013. -- FILE PHOTO: REUTERS

JAKARTA (REUTERS) - Indonesia's economy had annual expansion of 5.81 percent in the second quarter, the slowest pace in nearly three years, the statistics bureau said on Friday.

It said gross domestic product (GDP) increased by 2.61 percent from the first three months of this year.

A Reuters poll had forecast annual growth of 5.95 percent and quarterly, seasonally-unadjusted expansion of 2.75 percent.

Growth is slowing in Southeast Asia's largest economy, due to weaker exports and slowing investment and domestic consumption.

In the first quarter, Southeast Asia's largest economy had annual growth of 6.02 percent.

The government has had a target of 6.3 percent this year. The central bank in July cut its forecast to 5.8-6.2 percent from 6.2-6.6 percent.

Inflation is a major worry in Indonesia, especially after the annual pace reached 8.61 percent in July.

Bank Indonesia on Thursday said inflation peaked last month and will ease to 8.04 percent in August. The consumer price index, Governor Agus Martowardojo said, will rise 8.28 percent this year.