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Indonesian economic growth slows to 5.78%, slowest pace in 4 years

Published on Feb 5, 2014 12:37 PM
Traffic build up to avoid flooded areas in Jakarta, Jan 24, 2014. Flooding is a perennial problem in Jakarta, the political and economic heart of South-east Asia's biggest economy, which last year grew at its slowest pace in four years. -- PHOTO: AGENCE FRANCE-PRESSE

JAKARTA (REUTERS) - Indonesia's economy grew at its slowest pace in four years last year, the as the end of a commodities boom undermined exports and higher interest rates dragged on consumption.

Gross domestic product rose 5.78 per cent last year, after a 6.23 per cent increase in 2012 and marking the slowest growth since 2009. The result compared with the median forecast of 5.7 per cent growth in a Reuters poll of economists.

South-east Asia's biggest economy has enjoyed annual growth of more than 6 per cent in recent years, underpinned by spending among its growing middle class. Domestic demand, however, has started to feel the impact of aggressive rate increases by the central bank aimed at easing the current account deficit and reining in inflation.

In the October-December period, the Indonesian economy grew 5.72 per cent from a year earlier, while on a quarterly basis it contracted 1.42 per cent. Economists had expected 5.3 per cent growth on an annual basis and a quarterly 1.67 per cent contraction.