Indonesia posts 6.1% GDP growth for 2010: officials


AFP

JAKARTA — Indonesia’s gross domestic product grew 6.1 percent last year, officials said Monday as Southeast Asia’s biggest economy confirmed its position among the top ranks of emerging markets. Central Statistics Agency chairman Rusman Heriawan told reporters that the resource-rich country of 240 million people posted 6.9 percent growth in the fourth quarter compared with 5.8 percent a year earlier. The figures made it among the best performers in the Group of 20 rich and developing countries. The full-year growth figure compared with 4.5 percent in 2009 and was in line with expectations, putting Indonesia on course to reach its target of 6.0-6.5 percent growth in 2011. The country’s stock market saw a slight uptick on the data, with the benchmark index 0.1 percent firmer at 3,499.613 at midday. The market soared around 40 percent last year but has shed more than five percent so far in 2011 due to concerns about rising inflation, on top of persistent infrastructure bottlenecks and endemic corruption. Heriawan said Indonesia could look forward to stronger growth this year, in line with the broader recovery of the global economy from the 2008-2009 financial crisis. “If the global economic recovery continues, I’m pretty sure that we’ll be able to reach higher economic growth in 2011,” Heriawan said. The statistics agency said exports in the fourth quarter increased 16.1 percent, a sign of the appetite for Indonesian resources from China and India. Investment climbed 8.7 percent and government spending rose 7.3 percent. Household consumption increased 4.4 percent, a key figure given that some 60 percent of Indonesia’s gross domestic product is attributed to domestic demand. The government under President Susilo Bambang Yudhoyono last year announced a massive overhaul of the country’s decrepit infrastructure worth US$140 billion to 2015, US$90 billion of which has to come from the private sector. Standard Chartered Bank economist Fauzi Ikhsan said new and improved ports, roads, bridges and railways were essential to Indonesia’s ambitions to become a regional economic powerhouse. “The economic growth was supported by high commodities prices which raised the country’s export income. Foreign direct investment and public consumption also helped the growth,” he told AFP. “In the near future, the government should push infrastructure development as this is important to attract private investment.” Indonesia needed to be rescued from bankruptcy a little over a decade ago when it was hit hard by the Asian financial crisis of 1997-1998, leading to the fall of autocratic strongman Suharto after 32 years in power. Since then it has won plaudits for rebuilding its foreign currency reserves, restoring confidence to its banking system and managing the macroeconomic levers of the economy with a steady hand. It recently won upgrades from Fitch and Moody’s ratings agencies, lifting its sovereign debt to one below investment grade. But with interest rates rising this month for the first time since 2008 in the face of inflation above seven percent, analysts warn the economy is still vulnerable. Sharp outflows of speculative foreign capital, which poured into the country last year, pose another threat to stability, along with opposition to further economic reform from politically entrenched vested interests, they say.