Economy grew by 5.13% in 2004: BPS
Urip Hudiono, The Jakarta Post, Jakarta
Despite pre-election jitters and a final-quarter slowdown, the economy in 2004 still managed to grow by 5.13 percent, continuing a steady four-year improvement, the Central Statistics Agency (BPS) said on Wednesday.
The figure, which exceeded the initial target of 4.8 percent and 2003's growth of 4.1 percent, has pushed the nation's income per capita to Rp 10.64 million (US$1,181), from Rp 9.57 million the year before.
The report shows that strong household consumption continued to be the main fuel of the economic engine, making up about 66.54 percent of the gross domestic product (GDP) -- the value of goods and services produced throughout the year.
Nevertheless, investment and exports had managed to show a steady expansion and began to contribute more to the GDP growth, BPS head Choiril Maksum said.
Most sectors in the economy had reflected this overall growth, except for the mining sector, which had contracted by 4.61 percent, Choiril said.
"The most significant growth was in the transportation and communications sector, at 12.70 percent," he said.
Trailing further behind, the construction sector had expanded by 8.17 percent over the year, while financial services grew by 7.72 percent.
With some 40 million people currently living on or below the poverty line, and 2.5 million new workers entering the country's job market each year, Indonesia still needs economic growth of more than 6 percent to soak up its unemployment.
Estimates by economists show that each extra 1 percent of GDP growth per annum would create up to 400,000 new jobs.
However, the country's improving investment and export markets boded well for the future, BPS social statistics official Rusman Heriawan said.
"In previous years, consumption was the backbone of our economy," he said. "However, we can see that investment growth in 2004 has outpaced growth in consumption."
Consumer spending grew by 4.94 percent in 2004 while growth in investment reached 15.71 percent.
However, in terms of total numbers, consumer spending still made up the lion's share of GDP, at about 66.5 percent, as against investment, 20.9 percent, while net-export earnings contributed the remaining 12.6 percent.
Indonesia's exports grew to an historic high of $69.71 billion last year, up 11.49 percent from the previous year, boosted by strong sales in non oil and gas commodities of palm oil, electronics, clothing, coal and tin.
Still, analysts say much work is left to be done to boost more of growth in investment.
Business remains poor here compared with Indonesia's regional competitors, with overseas investors steering clear of the country because of corruption in business, excessive red tape, higher relative costs of labor and uncertainties about the legal system and security situation.
Nevertheless, because of the strong consumption and improving investment and export trends, Rusman predicted this year's economic growth target of 5.5 percent was attainable.