Minister of Finance Sri Indrawati Mulyani said Wednesday that while growth was beginning to dip as a result of global factors, she understood that growth in the first half of the year was above expectations, a statement echoed by a number of analysts.

Yudhi Sadewa of the Danareksa Research Institute said growth appeared to have come in above 6.2% for the first semester, a view shared by Bank Danamon chief economist Anton Gunawan, Investor Daily reported.

Bank Mega director Kostaman Thayib said the 33% in credit disbursements was evidence of strong growth, with the plantation, toll road and power sectors receiving major investment inputs.

Bank Indonesia Governor Boediono, at a lunch with foreign journalists, also stressed that the economy was in good condition, with the rice surplus an important factor in creating positive economic conditions.

“Economic growth in Indonesia has been quite steady and is gradually accelerating. This is a pre-condition for us to grow further in the coming years. Hopefully within five years we will be able to go back to the pre-crisis growth path of 7%-plus,” he said.

Boediono refused to be drawn on whether the central bank will continue to push interest rates higher, but provided room for optimism that they won't move higher. “Our experience has shown that when we have a domestic fuel price rise there is a spike for two months and after that there is a reduction,” he said.  

There was no sign of recession in the automotive market. Johnny Dharmawan, vice chairman of the Indonesian Automotive Industry Association (Gaikindo), said sales this year were expected to top 500,000 units, despite the rise in fuel prices at the end of May.

"If the fuel prices had not gone up, sales may have been significantly higher than 500,000 units," he added, according to Reuters.  

Local business daily Kontan said there was strong interest in vehicles from the top to bottom of the range at the Jakarta Motor Show, officially opened by the industry minister on Friday.

Organizers said they expected sales of around Rp1.6 trillion (around $170 million) during the show, which ends on July 20, up from last year's Rp1.5 trillion. PT Mercedes Benz Indonesia said it was expecting 700 sales out of the show, while BMW Indonesia said it was not taking part in the show because sales figures were already very strong.

Last year, domestic car sales reached 434,449 units, industry data shows, recovering from a slump in 2006 when sales dropped to 318,904 units after the government more than doubled the fuel price in 2005.

Bambang Trisulo, chairman of Gaikindo, said Indonesia was expected to produce 1 million cars for domestic and export markets by 2011. He forecast 750,000 units would be for the domestic market and 250,000 units for exports.

Motorcycle sales in the first half grew 44% to 3,060,400 units from a year earlier, industry officials said, according to Asia Pulse, finance sector analysts said 70% of purchases were replacement bikes, not first-time owners.

Sales of electronic products were estimated to have risen 22% to Rp8.6 trillion ($937 million) in the first half of this year compared to the same period last year, Asia Pulse reported.

Strong growth was recorded especially outside Java, secretary general of the Electronic Marketer Club (EMC) Handojo said, adding sales in the outer regions grew 30% month-on-month.

Domestic cement sales were also strong, rising 25% in June to 3.47 million tons compared to the same month a year earlier, according to major producer PT Semen Gresik.

In the six months to June 30, cement makers sold 18.9 million tons of cement in Indonesia, 21% more than a year before, Gresik said, citing data from the Indonesian Cement Association, Bloomberg reported.

The path for the government to issue Islamic bonds, or sukuk, was cleared by the House of Representatives, with the approval of a bill by a working committee on Thursday. A plenary session of the House is expected to approve the bill this week.

The House also approved the use the finance ministry's property valued at Rp18.371 trillion, or about $2 billion, as the underlying assets for the Islamic bonds, which sets the maximum amount of sukuk the government can issue.

The government has said it expected to raise the equivalent of about $1 billion from the sale of rupiah-denominated Islamic bonds in August, and to sell a dollar sukuk in October, raising as much as $1 billion.