Continuing to Rise!

The dRi Coincident Economic Index (CEI), which tracks the current state of the economy, gives a stronger signal that economic activities are getting stronger. The index rose significantly to 114.71 from 113.25 in November 2010 (up by 1.29% month-on-month). This is also the third straight month that the CEI has increased, providing stronger grounds to believe that the economy is firmly in an expansionary phase.

The significant increase in the CEI is also reflected in the most recent GDP data published by the Central Bureau of Statistics (BPS), which shows that the Indonesian economy is continuing to expand. In Q4 2010, the Indonesian economy grew by 6.89% on a yearly basis, or faster than in Q3 2010 when the economy grew by 5.8% on a yearly basis. On a quarterly basis, the Indonesian economy contracted 1.45% in Q4 2010.

The growth rate in the fourth quarter of 2010 easily surpassed the market's expectation of 6.27% year-on-year growth (or -1.97% quarter on quarter). It also beat our forecast of 6.50% year-on-year growth (or -1.77% quarter on quarter). Furthermore, the GDP growth in the fourth quarter of 2010 is also above the average GDP growth in the last five years and it is also the highest figure in the last ten years.

For the full year of 2010, the Indonesian economy grew by 6.1%, or much better than 2009's growth rate of 4.6%. It was also slightly higher than the market's expectation of 6.0% but in line with our expectation of 6.1% growth for 2010.

In nominal terms, Indonesia's GDP reached Rp. 6,423 trillion, or up 14.6% from the previous year's figure of 5,604 trillion. As such, Indonesia's GDP per capita increased 13% from Rp. 23.9 million to Rp. 27 million in 2010. In US dollar terms, the Indonesian GDP per capita rose from USD 2,350 to USD 3,005 (or up by 27.9% thanks also to the 14% appreciation of the Rupiah from Rp.10,356 per US Dollar to Rp. 9,074 per US Dollar over 2010).

By sector, the Transportation and Communications sector posted the highest growth in 2010 (13.5 percent yearon-year), followed by the Trade, Hotels, and Restaurants sector, which grew 8.7 percent year-on-year. Meanwhile, the Construction sector grew by 7.0 percent and the Manufacturing sector managed to grow a modest 4.5 percent in 2010.

Meanwhile, if we look at the share of each sector in the overall GDP, the Manufacturing sector had the biggest share of 24.8 percent in 2010, followed by the Agriculture sector (15.3 percent), the Trade, Hotels, and Restaurants sector (13.7 percent), and the Construction sector (10.3 percent).

Hence, it can be concluded that the Trade, Hotels, and Restaurants sector made the biggest contribution to economic growth in 2010 (around 1.5%) as this sector recorded relatively high growth and also had a high share of overall GDP. Meanwhile, although the Transportation and Communications sector enjoyed the highest growth, its share of overall GDP was relatively low, meaning that its contribution to economic growth in 2010 was only around 1.2%. This was also the case for the Manufacturing sector. Although it had the biggest share of overall GDP, it only grew 4.5%, meaning that its contribution to economic growth was only around 1.2% in 2010.