Indonesia continues solid growth

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Southeast Asia’s biggest economy, Indonesia, grew by 6.17 per cent in the third quarter of 2012, the eighth quarter of growth above the 6 per cent mark, the Central Bureau of Statistics said in Jakarta on November 5.

Economists say the success is due to Indonesia’s reluctance to extend monetary easing to counter faltering global growth and keeping its interbank rates stable, as opposed to other ASEAN countries such as Thailand and the Philippines.

Much of the boost also comes from government spending. President Susilo Bambang Yudhoyono has pledged to build more highways, airports and ports to improve infrastructure and meet a growth target of an average 6.6 percent by the end of his second term in 2014.

Another driver is the rise in domestic consumption. Greater purchasing power especially of the rising middle class is prompting people to buy more cars, consumer goods, electronics and houses.

The telecommunications, construction and manufacturing sectors led economic growth on the production side. Manufacturing rose 6.4 per cent, due to expansion in domestic demand-related industries such as food and beverages, chemicals, cement and steel.

However, export was shrinking due to strong domestic demand. Private consumption increased 5.7 per cent in the third quarter from a year earlier, and investment surged 10 per cent. Exports slid 2.8 percent, the data showed. Domestic consumption accounted for 63 per cent of GDP, investment contributed 33.2 per cent, while net exports deducted 0.61 per cent from the economy.

Investment, which accounts for one third of gross domestic product, rose 10 per cent in the third quarter, supported by strong inflow of foreign investment into the manufacturing sector. Indonesia booked a record foreign direct investment of $5.9 billion in the third quarter, up 22 per cent from a year earlier.

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Reading Time: 1 minute

Southeast Asia’s biggest economy, Indonesia, grew by 6.17 per cent in the third quarter of 2012, the eighth quarter of growth above the 6 per cent mark, the Central Bureau of Statistics said in Jakarta on November 5.

Reading Time: 1 minute

Southeast Asia’s biggest economy, Indonesia, grew by 6.17 per cent in the third quarter of 2012, the eighth quarter of growth above the 6 per cent mark, the Central Bureau of Statistics said in Jakarta on November 5.

Economists say the success is due to Indonesia’s reluctance to extend monetary easing to counter faltering global growth and keeping its interbank rates stable, as opposed to other ASEAN countries such as Thailand and the Philippines.

Much of the boost also comes from government spending. President Susilo Bambang Yudhoyono has pledged to build more highways, airports and ports to improve infrastructure and meet a growth target of an average 6.6 percent by the end of his second term in 2014.

Another driver is the rise in domestic consumption. Greater purchasing power especially of the rising middle class is prompting people to buy more cars, consumer goods, electronics and houses.

The telecommunications, construction and manufacturing sectors led economic growth on the production side. Manufacturing rose 6.4 per cent, due to expansion in domestic demand-related industries such as food and beverages, chemicals, cement and steel.

However, export was shrinking due to strong domestic demand. Private consumption increased 5.7 per cent in the third quarter from a year earlier, and investment surged 10 per cent. Exports slid 2.8 percent, the data showed. Domestic consumption accounted for 63 per cent of GDP, investment contributed 33.2 per cent, while net exports deducted 0.61 per cent from the economy.

Investment, which accounts for one third of gross domestic product, rose 10 per cent in the third quarter, supported by strong inflow of foreign investment into the manufacturing sector. Indonesia booked a record foreign direct investment of $5.9 billion in the third quarter, up 22 per cent from a year earlier.

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