GDP Grows 5.7% in First Quarter

JAKARTA

INDONESIA’S gross domestic product (GDP) grew 5.7 percent year on year in the first quarter of 2010 due to strong domestic demand and low inflation.

Southeast Asia’s biggest economy accelerated in the January-March period at its fastest pace since the third quarter of 2008, but was only just better than the 5.4 percent in the fourth quarter of last year, the Central Statistics Agency said this week.

Non-seasonally adjusted quarterly growth was 1.9 percent, a reversal of the previous quarter’s 2.4-percnet contraction.

“Greater growth and inflation stability should foster a more conducive environment for foreign and domestic fixed investment, which in turn bodes well for trend GDP growth,” HSBC Senior Asian Economist Robert Prior-Wandesforde said in a statement.

“At the same time, investors are likely to be reassured by the country’s consistent current account surplus, relatively low levels of private, external and government debt as well as its subdued fiscal deficit.”

Bank Indonesia, the central bank, last week kept its key interest rate at 6.50 percent, where it has been since August, and analysts said the latest GDP figures were unlikely to prompt it to start tightening monetary policy.

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