Aditya Suharmoko, Jakarta – The country's economy grew the fastest in the past 10 years in 2007 due in particular to robust investment and exports, the Central Statistics Agency (BPS) reported Friday.
The country saw 6.32 percent growth in 2007, with investment and exports growing 9.2 percent and 8 percent respectively, said the BPS deputy chairman for balance of payments and statistical analysis, Slamet Sutomo.
The growth was in line with the government's expectation of about 6.3 percent under the 2007 state budget.
By sector, communications and transportation experienced significant growth of 14.4 percent, and water, gas and electricity of 10.4 percent.
Other sectors that also experienced rapid growth were the construction sector at 8.5 percent; the trade, hotel and restaurant sectors at 8.5 percent; and the financial, real estate and service sectors at about 8 percent.
Sutomo also said, the economy grew only 6.25 percent in the fourth quarter of 2007 from the same period a year earlier, declining from 6.51 percent recorded in the third quarter, due mainly to the rise in global oil prices, which slowed down the global economy.
The surge in global oil prices will affect Indonesia's economy further in 2008, with President Susilo Bambang Yudhoyono on Friday revising the government's economic growth target down from 6.8 percent to 6.4 percent.
The current global oil prices are hovering at or above US$90 per barrel after they soared past $100 per barrel earlier this year.
In the fourth quarter of 2007, the agricultural sector's output fell 22.9 percent due to a dry season. Output from the mining and industrial sectors also dropped 0.1 percent and 0.2 percent respectively.
Meanwhile, by location, Sutomo said, Java and Sumatra islands were the main drivers of the country's economy, contributing 58.2 percent and 23.2 percent respectively.
Regarding investment, he said, "investment will still be robust this year as investors have shown their optimism about investing funds here this year."
The BPS has predicted that the business tendency index in the first quarter this year will be 114.84, meaning that all businesses will grow – excluding the financial, rental and service sectors – as compared to the fourth quarter of 2007.
According to Sutomo, if the index is above 100, it means that investors are optimistic about the country's investment climate.
Sutomo said the growing businesses would absorb more manpower, which would reduce the unemployment rate.
The agency also expects the consumer tendency index to rise in the first quarter of 2008, meaning that people's purchasing power would rise, which in turn would drive the economy.