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January 2, 2009

Indonesia GDP at 6.2% in 2008

Indonesia's economy expanded 6.2 percent in 2008, the finance ministry said on Thursday, slowing slightly from 6.3 percent in 2007 when Southeast Asia's biggest economy enjoyed its fastest growth in a decade, reported Reuters.

While growth was roughly in line with official forecasts, the government has warned that 2009, an election year, could be tougher, with growth seen at between 4.5 and 5 percent -- below the 6 percent pace that analysts say is needed to prevent unemployment from rising among Indonesia's 226 million people.

Indonesia, a major producer of commodities ranging from palm oil to copper, has been hit by the world financial crisis as investors bolted from emerging markets and demand for commodities cooled.

The rupiah currency fell to a decade low against the dollar, and the stock exchange was forced to shut for three days in October after shares plummeted.

Inflation in 2008 was 11.4 percent -- in line with government forecasts -- and the budget deficit was 0.1 percent of GDP, the finance ministry said in a statement.

Tax revenue amounted to 658.7 trillion rupiah ($60.71 billion), which was 49.4 trillion rupiah above the government's target.

"Generally the actual macroeconomic indicators were good although in the past few months there has been some significant pressure from the global financial crisis," the ministry said in its statement.

President Susilo Bambang Yudhoyono, who will run for re-election this year, said on Wednesday his government would launch a new fiscal stimulus on top of spending plans set in the state budget, in order to help the economy withstand the impact of the global crisis.

He also said he would cut subsidised fuel prices further, and would give priority to jobs and inflation.

The government hopes new spending and investment will support economic growth and counter the effects of the global economic slowdown.

Finance Minister Sri Mulyani Indrawati has said that the government would announce a 12.5 trillion rupiah ($1.14 billion) spending plan for 2009 including support to industries hit by the global economic slump.

Indonesia has already said it would spend about $9 billion on infrastructure projects to boost the economy, though it is not clear how much of it would be new spending and how much would be financed by funds unused in 2008 and carried over to 2009.

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