Indonesia’s economy grew at its fastest pace in 15 years in 2011 boosted by increased investment and growing domestic demand.


6 February 2012 Last updated at 06:21 GMT

Southeast Asia’s largest economy expanded by 6.5% in 2011, the highest rate since 1996. Indonesia also regained its investment grade status last year as total domestic and foreign investment rose by almost 20% to $28bn (£18bn).

Analysts said growth was likely to remain strong going forward. The latest data also showed that the economy grew by 6.5% in the October to December quarter from a year earlier. Raddhika Rao of Forecast said the strong data “validates the government’s optimism on the growth front, driven for the most part by robust consumption and investment spending”.

‘Least exposed’

The data comes at a time when problems in the eurozone and the US have seen considerable uncertainty in the global economy. As the eurozone struggles to find a solution to its debt crisis and the US copes with a high rate of unemployment, demand from two of the biggest economic zones in the world has been falling. That has hurt many Asian economies that rely heavily on exports for growth.

However analysts said that Indonesia has benefited from the fact that a huge part of its growth is driven by domestic consumption. “Indonesia is one of the least exposed economies in the region, with a vast domestic market and a relatively small share of exports to gross domestic product, so it is insulated from volatility in the global economy,” said George Worthington of IFR. Domestic consumption accounts for nearly 60% of Indonesia’s economy.

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