Economy grows 6% in Q1 on exports, consumption

Urip Hudiono, The Jakarta Post, Jakarta

Strong exports and reviving consumption helped push Indonesia's economy in the first quarter, momentum that could see it grow even faster over the course of the year.

First-quarter growth in terms of gross domestic product (GDP) was at 6 percent year-on-year, the Central Statistics Agency (BPS) reported Tuesday, from last year's first quarter.

On a quarterly basis, the size of Indonesia's economy grew by 2 percent to Rp 915.9 trillion (US$101.7 billion), from last year's final quarter.

Exports became the economy's main thruster, growing by 8.9 percent and making up more than half of the on-year first-quarter growth at 4.1 percent, as Indonesia gained from the strong demand and prices in the global market for its main commodities of metals, coal, crude palm oil and rubber.

Private consumption, which has been recovering lately due to the easing of inflation and interest rates in the country, gave further drive to the economy, growing by 4.5 percent and contributing to 2.6 percent of first-quarter growth.

Fixed investment and government spending also saw growth, at 7.5 percent and 4.3 percent respectively, but were still on their usual trend of beginning the year modestly.

Meanwhile, from the supply side, the BPS noted an on-year 9.3 percent growth in construction and an 8.5 percent expansion in Indonesia's trade and tourism industry.

The trade and tourism sector made up 1.4 percent of the total first-quarter growth, just after the manufacturing and processing industry, which grew by 5.4 percent and contributed to 1.5 percent of the growth.

BPS chief Rusman Heriawan said exports have again continued from last year's final quarter in becoming Indonesia's main economic growth engine, and pointed out they were favorably developing into a more sustainable nature for further growth ahead.

"There is now a more richer composition between exports of natural resources commodities and manufactured goods," he said. "This can help stop Indonesian exports from relying too heavily on commodities, which are mostly built up just on market price and demand trends."

Private consumption still makes up more than 60 percent of Indonesia's GDP, while exports and imports account for less than 10 percent.

The government is expecting growth at 6.3 percent this year, and at a higher 6.8 percent next year.

In terms of unemployment and the affects of first-quarter growth, the BPS also noted in another separate report released Tuesday that the number of unemployed people decreased by 556,000 to 10.55 million in February, from a year ago.

This comes with another 2.4 million workers having been employed during the same period, bringing the total number of employed people to 97.58 million. Indonesia's workforce of people between the age of 15 and 64 years increased by 1.85 million to 108.13 million.

"The positive thing about the employment figures is that more women are getting opportunities to work, mostly in the manufacturing sector in a shift from the agriculture sector," Rusman noted.

Unemployment however still remains at a high 10 percent, still offsetting the current level of growth needed to reduce it. The government wants to reduce unemployment to 5 percent by 2009.
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