Indonesia growth spurt

 

Indonesia’s economy grew at its
fastest annual rate for six years in 2010, driven by consumer spending and
investment.

Gross domestic product was 6.1 per
cent higher in 2010 than in the previous year, the statistical office said.

Growth was given an unexpected
boost in the final three months of the year, figures showed.

Analysts said the speed of growth
may lift inflation at a time when high food prices were already hurting
consumers.

Last week the central bank raised
interest rates for the first time in two years in an attempt to slow price
growth.

Indonesia’s main cost of borrowing
rose a quarter of a percentage point to 6.75 per cent.

Analysts said that the
better-than-expected GDP figures may increase calls for interest rates to rise
further in coming months, not least because they also expect economic growth to
continue.

Helping drive growth will be steady
consumer spending and companies investing in their businesses to fund
expansion.

“Growth in first quarter this
year will be positive amid soaring inflation as many companies will spend
capital for investment purposes,” said Eric Sugandi, an economist at
Standard Chartered Bank.