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Indonesia Economy Expands On Investment, Domestic Demand

Indonesia Economy Expands On Investment, Domestic Demand

Indonesia's economy managed to expand at an above-6 percent level again in the fourth quarter on robust investment and domestic demand. However, the growth rate slowed marginally due to the ongoing weakness in exports.

Southeast Asia's largest economy advanced 6.11 percent annually in the fourth quarter, the Central Bureau of Statistics reported Tuesday. Economists had forecast gross domestic product to climb 6.2 percent after logging 6.17 percent growth in the third quarter.

On a quarterly basis, GDP was down 1.45 percent in the fourth quarter, which was slightly worse than the 1.3 percent drop forecast by economists.

For the whole year of 2012, the economy advanced 6.23 percent, which was slower than the 6.5 percent growth seen in 2011.

Household consumption gained 5.36 percent annually and investment surged 7.29 percent in the fourth quarter. Government spending, on the other hand, dropped again in the fourth quarter, down 3.34 percent.

While exports rose 0.5 percent, domestic demand pushed up import growth to 6.79 percent in the last quarter of 2012, data showed. In December, exports dropped 9.8 percent, and imports slipped 5.6 percent, taking the trade deficit to around $155 million.

The recent survey from Markit Economics revealed that Indonesia's manufacturing sector shrank slightly in January. The Purchasing Managers' Index fell to 49.7, logging the first deterioration in the health of the manufacturing sector recorded since May 2012.

The central bank is expected to leave its key rate unchanged at a record low 5.75 percent in February as inflation remains within the target of 3.5 percent to 5.5 percent.

Inflation rose to 4.57 percent in January as power tariffs and food prices increased notably after floods hit various parts of the country.

by RTT Staff Writer

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