Indonesian financial sector stability has been well maintained. The banking sector is the largest segment of the financial sector: as of end 2006 it accounted for nearly 78% of financial assets compared to 80% the year before. The slight decline was largely due to the return of growth to the mutual funds industry this year however, the stability of the country’s financial sector still depends mainly on the healthiness of the banking sector.
Following a year of very weak performance in the aftermath of the fuel price adjustment in 2005, investment in Indonesia began to show strong signs of recovery in the final quarter of 2006, with year-on-year investment growth rising to 8.2 percent, from less than 2 percent in the previous four quarters. Strong growth continued during the first half of 2007, with investment rising by 7.3 percent, well above GDP growth of 6.1 percent.
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