Business

Indonesia economy grows by 6.5% in the first quarter

Customers shop at a Carrefour in Jakarta.
Image caption Indonesian consumers continue to shop, despite rising prices for food and fuel.

Indonesia's economy has expanded by 6.5% in the first three months of the year, helped by strong growth in consumption and investment.

The figure was largely in line with what economists had expected.

Consumption, which accounts for two-thirds of South East Asia's largest economy, stayed buoyant between January and March.

And investment grew by 27.3% in the first three months of 2011, compared to the same period a year previously.

'Investment high'

"This growth definitely will boost portfolio and foreign direct investment," said Andry Asmoro, economist at CIMB Niaga.

"Domestic investment is high and infrastructure is ongoing and able to generate better growth."

The Jakarta-based economist said he plans to upgrade his estimates for future growth.

The Indonesian government is targeting full-year expansion of 6.4% in 2011.

But inflation in food and fuel remains a problem.

The government currently spends hundreds of millions of dollars every year in subsidising fuel costs, in order to keep a lid on rising prices.

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