INDONESIA’S economy grew at its slowest pace in more than four years after an export mineral ban and aggressive interest rate rises to rein in a large current-account gap cooled momentum.

    Southeast Asia’s largest economy has taken bold measures to shrink its current-account deficit to buffer against capital outflows and inspire confidence in its fragile rupiah.

    Since a recent series of upbeat economic figures this year, investors have turned more optimistic about the economy but remain concerned over political risks as the country heads into presidential elections in July. However, inflationary pressures are easing and the mineral ban has so far had a limited impact.

    Gross domestic product in the January-to-March quarter expanded 5.21 percent from a year earlier, data from the statistics bureau showed yesterday. That was the slowest pace since the third quarter of 2009 and compared with 5.60 percent forecast in a Reuters poll. Growth was 0.95 percent on a quarterly basis against expectations of 1.26 percent.

    The mining sector contracted 0.38 percent in the first quarter from the same period a year earlier, against a 3.91 percent expansion in October-December.

    “Mining fell due to the export ban on some minerals and raw materials,” said head of the statistics bureau, Suryamin, adding that the construction sector grew 6.54 percent from the same period a year earlier, boosted by the building of smelters.

    Meanwhile, domestic consumption — the main driver of the economy — grew 5.61 percent from a year earlier and was stronger than 5.25 percent growth in the previous quarter, despite efforts by policymakers to restrain demand.

    Buoyant consumption and recovering investment were expected to bode well for the outlook this year, analysts said.

    “Investment growth has continued to recover and might have bottomed out as we have expected — and this is crucial for the GDP growth outlook going forward,” said Gundy Cahyadi, economist at DBS in Singapore.

    “Investment growth was the key drag to the economy in 2013, and a strong recovery this year will be significant for the prospect looking into 2015 and beyond.”

    Spot rupiah fell 0.1 percent to hit a session low of 11,535 per dollar after the data.

    Indonesia has for the first time climbed into the ranks of the world’s top 10 largest economies — a notch below the United Kingdom — according to recent data from the World Bank.

    Last year, its fortunes were far less sanguine. Hit badly by capital outflows from a wide current-account deficit, policymakers strived to cool down the economy by dampening imports and tightening fiscal and monetary policy.

    (SD-Agencies)