TheJakartaPost
Please Update your browser
Your browser is out of date, and may not be compatible with our website. A list of the most popular web browsers can be found below.
Just click on the icons to get to the download page.
Economy, jobs grow on strong investment
Indonesia’s overall economy and employment rate remain in positive growth territory thanks to increasing investment and household consumption amid the lingering global crisis that has weakened exports
Change Size
I
ndonesia’s overall economy and employment rate remain in positive growth territory thanks to increasing investment and household consumption amid the lingering global crisis that has weakened exports.
The nation’s gross domestic product (GDP) grew 6.3 percent in the first quarter of this year compared with the same quarter a year ago, after expanding by 6.5 percent in the previous three quarters, the Central Statistics Agency (BPS) announced on Monday.
Investment and domestic consumption contributed 87 percent to the country’s economic growth, as they expanded 9.9 percent and 4.9 percent, respectively, in the first three months of this year from the same period in 2011.
“Going forward, it is imperative to consider the fact that the contribution from net exports has been almost non-existent in the past two quarters, which would only mean that the onus on growth would have to be on further expansion in domestic demand,” said Gundy Cahyadi, an economist at OCBC Bank.
Government officials and economists have warned that the ongoing worldwide economic slowdown will weaken global demand, with Indonesia seeing almost no contribution from net exports in the January–March period of this year.
Rising investment, however, has not only offset weakening exports, but also bolstered employment. Indonesia provided about 3.1 million new jobs for the country’s labor force from August 2011 to February 2012, compared with a 1.61 million decline in the number of workers in the previous six months starting February 2011.
“The investment credit rate has been increasing and this shows that more jobs are being created,” said Institute for Development of Economics and Finance (Indef) economist Aviliani.
There were 112.8 million workers in Indonesia as of February this year, compared with 109.7 million at the end of August last year.
The labor force also rose to 120.4 million from 117.4 million, resulting in a decline in the unemployment rate to 6.32 percent in February this year from 6.56 percent last August.
For every 1 percent of economic growth, some 450,000 should be created, according to an assumption made by the government and House of Representatives. Both have also agreed to expand the country’s economy by 6.5 percent this year.
“Investment rates continue to show a good growth trend. This makes us upbeat to achieve our economic growth targets,” Finance Minister Agus Martowardojo said.
Bank Indonesia (BI) has also moved to create a conducive environment for growth with a historic low benchmark interest rate of 5.75 percent to encourage consumption and business expansion.
“The slowdown in GDP growth is likely to be viewed as healthy by BI and consistent with its overall assessment of the external environment,” Nomura economist Euben Paracuelles said.
