Indonesian President Susilo Bamabang Yudhoyono has forecast that the country's economy will grow 6.3 percent in 2007 in consideration of its economic increase in the second half of this year.

Economic experts agreed that Indonesia's long way to the recovery from an economic downturn that started last year seems to end.

Indonesia's economy was up 5.2 percent in the three months ending June in comparison with the same period of last year as a result of higher government spending and stronger mining and agricultural exports, the Central Statistics Agency (BPS) said, signaling an end to a slowdown that has lasted more than five quarters.

The latest growth figures will restore confidence in the economy, which grew 4.7 percent year-on-year during the first quarter, said BPS chief Rusman Heriawan.

Indonesia's consumption-driven economy expanded by 5.6 percent last year.

The country's economy has seen sluggish growth since the growth in the last quarter of 2004, which came to 6.6 percent.

The trend was exacerbated due to last year's fuel price hike, which pushed up inflation to 17 percent and interest rates to 12.75 percent, thus dealing a heavy blow on the economy's main engine of growth -- consumer spending.

Rusman said that the government spending and the country's exports had been the prime movers of growth in the second half of the year, expanding by 31.38 percent and 11.3 percent, respectively, from the same period a year earlier.

However, investment and consumer spending continued to drag the economy down in the second half of the year. Investment shrank by 0.98 percent and consumer spending slowed to 2.99 percent. Imports grew by 8.3 percent.

The country's exports in the first six months ending in June had increased by 15.14 percent to 46.9 billion U.S. dollars, riding on the back of higher market prices for the country's main export commodities of crude palm oil, rubber, coal and metals.

Meanwhile, the country's mining and agriculture sectors grew 5.43 percent and 5 percent, respectively.

"It is rare that agriculture serves as a leading sector for the growth, which may signify that our economy is strengthening its resource-based potentials," Rusman said.

Transportation and communications remained the leading sectors with 13.29 percent growth, while the country's manufacturing industry expanded slightly by 3.05 percent.

Many sectors, notably the automotive industry, reported a decline in production and high inflation and interest rates.

However, some opinions held that macro-economic indicators and the financial sector showed a positive trend on one side, but the real sector grew at a rate of 6 percent annum, far from reducing significantly the unemployment rate of 11 percent.

Some economic experts said the key for the economic recovery is investment. In the past Soeharto era, national investment accounted for one third of the gross national product, but now the ratio may be only one fourth.

According to President Yodhoyono, the government should overcome many challenges to meet its economic targets for the future, especially for 2007.

Source: Xinhua