Indonesia posts 6.5% GDP growth for 2011

Workers string up concrete parts on a flyover construction site in downtown Jakarta on January 31, 2012. Indonesia’s economy grew at the fastest rate for 15 years in 2011, registering a 6.5 percent rise in gross domestic product, spurred by strong household consumption and private investment. AFP PHOTO/BAY ISMOYO

JAKARTA—Indonesia said Monday its economy grew at the fastest rate for 15 years in 2011, spurred by strong household consumption and private investment in Southeast Asia’s biggest economy.

The country, which has become a magnet for foreign money, posted a 6.5 percent rise in gross domestic product last year – the quickest pace since the 1997-98 Asian financial crisis – putting it on track to hit the government’s 6.7 percent forecast for this year.

The strong figures were led by a 4.7 percent rise in domestic demand, which accounted for around 60 percent of GDP, and an 8.8 percent surge in private investment, according to a government official.

Government spending also rose 3.2 percent, the official added.

With a population of 240 million, Indonesia has become a focus for foreign investors who ploughed $20 billion into the economy in 2011, up from $17 billion the year before.

Singapore, Japan and the United States were among top investors, tapping into the country’s growing mining and telecommunications sectors, as well as winning contracts for much-needed infrastructure developments.

Last week, the government said Indonesia posted a 29 percent surge in exports last year, reaching $203.62 billion and surpassing an official target of $200 billion.

The data came after Fitch ratings in December granted Indonesia an investment-grade credit rating after 14 years of junk status, followed by a similar move from Moody’s Investors Service last month.

But as some developed nations remain in the economic doldrums and others begin to make slow recoveries, Indonesia expects lower demand for its exports to slow its rapid growth to 6.43 percent in the first quarter.

“This year’s economic growth will depend on the government’s strategy to cope with the continuing global crisis,” said Central Statistics Agency spokesman Suryamin, who goes by one name.

Credit Suisse in a report Monday held a more pessimistic view, forecasting annual growth this year at 6.0 percent, warning Indonesia’s loose monetary policy could overheat the economy later this year.

“Indonesia may be the only country in Asia to show virtually no signs of an economic slowdown whatsoever, but this has not stopped its central bank from delivering more in the way of rate reductions than any other in the region to date,” the report said.

Meanwhile, Indonesia’s bourse was one of Asia’s best-performing markets last year, gaining 3.2 percent as many exchanges around the world contracted amid tough global economic conditions.

The market has soared around 5.0 percent so far this year.