Indonesia: Robust growth in the first quarter boosted by strong domestic consumption
May 5, 2011
In the first quarter, GDP grew 6.5% over the same quarter the year before. The reading was down from the 6.9% expansion observed in the previous quarter and a notch below market expectations of a 6.6% increase. Growth in the first three months of the year was mainly driven by strong demand from domestic consumers. Private consumption increased 4.5% year-on-year (Q4 2010: +4.4% year-on-year), while investment added 7.3% (Q4 2010: +8.7% yoy). Exports of goods and services grew 12.2% in the first quarter, down from 16.1% in the fourth. At the same time, imports expanded 15.6%, below the growth of 16.9% observed in the previous quarter. As a result, the net contribution from the external sector to overall growth fell from 1.6 percentage points in the fourth quarter to 0.1 percentage points in the first. At the sector level, the growth was led by an increase in services, which expanded 8.3% (Q4 2010: +8.9% yoy), boosted by transport and communication as well as the trade, hotel and restaurants sub-sectors. The industry sector grew 4.9% in the first quarter (Q4 2010: +5.0% yoy), led by buoyant manufacturing activity. Finally, agriculture expanded 3.5% in Q1 (Q4 2010: +3.8% yoy). The Central Bank expects economic growth to settle within the range of 6.0% and 6.5% in 2011 and between 6.1% and 6.6% in 2012.