Indonesian GDP: 6% and counting

Courtesy of The Financial Times, an article on Indonesia’s economic strength.  As the report notes:

Consumers are buying cars and motorbikes by the million, exports have jumped 18.5 per cent and fixed capital investment are up 7 per cent from July to September. It was the fourth consecutive quarter of GDP growth above 6 per cent. Indonesia is doing well, and people have noticed.

But can the country keep it up?

Indonesia has again shrugged off mounting financial gloom in the global economy, with growth holding steady at a 6.5 per cent in the latest quarter. The figure was slightly below a consensus of 6.6 per cent forecast by 16 economists polled by Bloomberg.

Most economists predict the poor US economic recovery and EU debt crisis will hit Indonesian growth at some point, but with two-thirds of the economy driven by domestic consumption and solid monetary fundamentals, the effect will not be catastrophic.

A slowing of inflation to 4.4 per cent last month may even enable the central bank to lower interests rates to a record low when they meet this Thursday for a monthly policy meeting.

Some of the strongest growth in the world’s fourth largest country (by population) has been in consumer goods. The largest car manufacturer, Astra, had a 30 per cent rise in net profit in the first nine months of the year.

Behind a rise in exports has been resource and mining companies, which have also been posting record earnings due to strong demand for coal, palm oil and natural gas. Third quarter imports rose 19.2 per cent, while household consumption was up 4.8 per cent from the same period a year earlier, the statistics agency said in a statement.

The only disappointments have been telecoms and cement: according to Citi, both sectors were below expectations in Q3, down 17 per cent and 4 per cent quarter on quarter respectively.

Even as the EU heads toward a probable recession, the signs showed higher growth in Indonesia. Exports rose more than 46.3 percent in September and have increased by more than 35 percent every month since April.

Now wonder Nouriel Roubini is bullish about Indonesia.

This entry was posted on Monday, November 7th, 2011 at 1:01 pm and is filed under Indonesia.  You can follow any responses to this entry through the RSS 2.0 feed.  Both comments and pings are currently closed. 

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