T

he economy grew at a faster pace in the third quarter this year from a quarter earlier, indicating the economy is heading for a full recovery after a slowdown triggered by the global economic downturn, a minister says.

Finance Minister Sri Mulyani Indrawati said Tuesday the economy was estimated to have grown by between 4.1 percent and 4.3 percent during July and September from a year earlier, supported by a recovery in investment and exports.

"Exports in the third quarter were still in the negative zone, but lower. If exports reached negative 19 percent sometime ago, they might reach about negative 10 percent *in the third quarter*," she said, adding investment might slightly improve although it remained slow.

"Private consumption, which accounts for about 60 percent of the economy, remained stable in the third quarter, she said.

Exports in August had shown signs of recovery as they rose 8.89 percent from a month earlier, despite still suffering a 15.41 percent decline on a year-on-year basis, according to the Central Statistics Agency (BPS).August's exports reached US$10.55 billion, surpassing $10 billion for the first time since October last year, as Indonesia's major trading partners showed signs of economic recovery.

The economy grew by 4 percent in the second quarter from a year earlier, supported by still robust private consumption and stronger government spending, bringing first-half growth up to 4.2 percent. The GDP growth in the second quarter has not been reported by the agency.

Mulyani expected the economy would accelerate to 4.5 percent growth in the fourth quarter of 2009, resulting in full-year growth of 4.3 percent. An acceleration of growth in the third and fourth quarters of this year will establish the foundations for even higher growth next year, with the government aiming to post 5.5 percent in 2010.

The main themes for economic growth next year will center on poverty reduction, job creation and infrastructure, Mulyani said.

The government and the central bank will also strive to maintain inflation at 5 percent, as high inflation would hurt people's purchasing power, which is the economy's main growth driver, she added.

Economists Purbaya Yudhi Sadewa and Faisal Basri estimated the economy would expand by 5.8-5.9 percent next year if the government improved infrastructure, including roads, ports and electricity, to attract investment in the manufacturing sector, which would help reduce poverty and unemployment as labor working in the formal sector would have more income-certainty.

Also on Tuesday, Japanese Finance Minister Hirohisa Fujii visited Indonesia to talk about bilateral relationships.

Mulyani said, citing Fujii's words, another five-year term for President Susilo Bambang Yudhoyono would create consistent policies and conditions, which would lead to a stable investment climate.