Exports grew 2.3% to a record high of $8.92 billion in November, according to data from the Central Statistics Bureau (BPS), while an increase in imports of raw material and capital goods indicated optimism among manufacturing industry.
While the country's trade surplus narrowed to $3.06 billion in November from $4.23 billion in October, there was an 18% on-month increase in raw material imports and a 94% on-month surge in capital goods imports.
"The spike in imports was of capital goods and raw materials, which shows investment is rising and will rise in the months ahead," Standard Chartered's Fauzi Ichsan said.
November non-oil and non-gas imports rose 57.0% on month to $4.43 billion, while oil and gas imports fell 14.4% to $1.43 billion. Imports of petroleum products were down 13% to $812.8 million.
In full year 2006, exports are estimated to have exceeded $100 billion in 2006, another all-time record, BPS said Tuesday (2/1/07).
BPS also released inflation data for December which showed the consumer price index rising to 6.6%, influenced by a spike in rice prices.
Inflation has tumbled from double-digit rates recently as the sharp rise in fuel prices in 2005 dropped out of the consumer price index calculation.
The figure is expected to come back down when the major rice harvest begins in March.
Bank Indonesia (BI) cut its benchmark interest rate on Thursday (4/1/07) by a quarter of a percentage point to 9.5%, a 16-month low, to encourage companies to borrow, Bloomberg News reported.
Finance Minister Sri Mulyani Indrawati said BI still has room to cut its benchmark rate later this year but the rate cuts will likely be limited.
Indrawati's comment about further rate cuts this year echoes market expectation that Bank Indonesia may pause its monetary easing for 2007 once the rate hits 8%-9%, Dow Jones Newswires reported.
BI Governor Burhanuddin Abdullah also hinted Thursday the central bank may loosen rates slowly, as core inflation is still high.
In a statement issued by BI, Abdullah said the bank sees 2007 as a “landmark year with promise for reinvigorating the nation’s economy.”
He predicted higher growth in 2007, alongside macroeconomic stability. “Growth in 2007 is predicted to reach 5.7%-6.3%, surpassing the estimated 5.5% economic growth for 2006,” the statement said.