Urip Hudiono, Jakarta – The economy grew 6.3 percent in the second quarter compared to a year ago, the fastest level in two years, on continued increases in exports, consumption and investment.
The latest figures from the Central Statistics Agency (BPS), which were released Wednesday, showed that second-quarter growth was the fastest since the first quarter of 2005.
On a quarterly basis, Indonesia's economy during the three months to June expanded by 2.4 percent to produce a gross domestic product (GDP) of Rp 962.5 trillion (US$ 106.9 billion), as government spending paced up from the previous quarter.
The latest growth figure also means that the economy has expanded by 6.1 percent since June of last year.
Government spending during the second quarter saw a 24.2 percent jump from the first, providing a significant boost for the overall economy.
"More government spending, particularly through the payment of an extra month's salary to civil servants and increased spending on capital goods, helped increase people's purchasing power and private consumption," BPS deputy director Slamet Sutomo said. "Imports of capital goods further added to the growth."
Exports continued to gather steam on increasing global demand, with the prices for Indonesia's metals, crude palm oil, coal and rubber growing by 9.8 percent, the highest of all categories, and contributing 4.5 percent to the second quarter's on-year growth.
Private consumption, which accounts for some 65 percent of the economy, grew by 4.7 percent and accounted for 2.7 percent of second-quarter growth. Fixed investment saw a boost of 6.9 percent and contributed 1.5 percent to overall growth.
Meanwhile, from the supply side, Indonesia's transportation and telecommunications sector replaced agriculture in terms of growth in the second quarter, with the former growing 11.9 percent.
"Growth in the transportation sector mostly occurred in the air transportation segment, as can be seen from the increasing number of airline passengers. Indonesia's telecommunications market also contains huge potential for more growth ahead," Slamet said.
Meanwhile, the manufacturing sector grew by 5.5 percent, while trade and tourism was up 8.3 percent.
The BPS figures, however, revealed disparities in the growth of labor-intensive industries compared to capital-intensive services, as well as disparities between Java and other regions.
For next year, Anggito Abimanyu, the director of the Finance Ministry's Fiscal Policy Agency, said that continued growth of between 6.5 and 6.9 percent was possible.
President Susilo Bambang Yudhoyono will deliver the outlines of the 2008 draft budget in a State of the Nation address to a House of Representatives' plenary session today.
"Growth has remained at around 6 percent for the past three quarters," Anggito said, adding that the government was aware of possible fallout from the recent global market turmoil on the current growth momentum. With economists assuming that 1 percent economic growth translates into around 400,000 new jobs, Indonesia's economy will need to grow by at least 6 percent per annum to be able to provide work for the estimated 2.5 million new job seekers coming on the labor market every year.