Indonesia’s economic growth surged in the fourth quarter of last year, as consumption increased following the relaxation of anti-virus movement restrictions and higher commodity prices drove exports to new highs.

The largest economy in Southeast Asia increased 5.02 percent year on year in the October-December quarter, compared to 3.51 percent growth in the previous quarter, according to Statistics Indonesia statistics released on Monday. That was basically in line with the government’s forecast and somewhat quicker than the 4.90 percent predicted in a Reuters poll.

Gross domestic output rose 3.69 percent in 2021, compared to a 2.07 percent drop the previous year, as the economy recovered from the impact of the COVID-19 epidemic.

However, mounting COVID-19 cases, anticipated financial market instability due to global monetary tightening, and Indonesia’s own rollback of monetary and fiscal stimulus cloud the picture for this year.

“The Indonesian economy returned impressively in the fourth quarter of last year, but the recovery has now entered a more challenging phase,” Capital Economics analyst Gareth Leather said in a note.

“In the first quarter, Omicron will be a minor impediment. However, decreasing commodity prices and policy tightening will be a larger impact.”

After the statistics, the major stock index (.JKSE), which had risen over 1% in early trade, reduced its gains.

In July-August, Indonesia was beset by a devastating surge of COVID-19 infections, however restrictions on mobility were removed around the end of August.

Household spending, which accounts for more than half of Indonesia’s GDP, increased by 3.6 percent in the fourth quarter, up from 1 percent in the previous three months.

Investment and government expenditure also increased quicker in the fourth quarter, which Statistics Indonesia chief Margo Yuwono ascribed to the restart of government and private sector operations that had been paused in the third quarter.

Export growth increased to 29.8 percent in the third quarter, up from 29.2 percent in the previous quarter, as prices for export items such as palm oil, coal, and nickel remained strong.

Covid-19 cases are currently rising again in Indonesia, due to the spread of the Omicron mutant, with Sunday’s total of 36,057 being the highest since August. Authorities, meanwhile, have not reinstated rigorous anti-virus measures.

As the government maintains healthcare and social protection expenditure, Josua Pardede, an economist at Bank Permata in Jakarta, forecasts 2022 GDP growth to rebound further to between 4.8 percent and 5 percent.

Beginning in March, Bank Indonesia will begin unwinding its loose monetary policy by raising the reserve requirement ratio for banks.

The tightening is considered as a preparation for rate rises in the United States, which have already roiled Indonesian financial markets.

Meanwhile, as part of the government’s fiscal normalisation program, the value added tax rate on most products and services is slated to rise in April.

A restriction on international exports of coal in January, as well as a recently adopted local selling rule for some palm oil products, might potentially limit export contributions to growth.