In the middle of soaring inflation and global economic turmoil due to increasing food and oil prices, Bali economy recoded positive trend. Economic growth during the second quarter of 2008 was by far higher than the previous quarter. Obviously economic growth was mainly driven by prime sectors of trade, hotels, restaurants, and services. Growth in trade, hotels, and restaurants was resulted by improving performance of tourism industry presented by following indicators: increasing tourist arrivals, increasing hotel occupancy rate, and increasing income generated from Visa on Arrival fee.

Statistical figures recorded tourist arrivals of 465,641, which is a 16% increase from the same period of previous year which recoded only 399,007. Average hotel occupancy rate increased from 43.5% to 58,9% during the same periods. And VoA revenue increased by also 16% from 5.4 millions US Dollars in the second quarter of 2007 to 6.3 millions US Dollars in the second quarter of 2008.

Growth in service sectors were normally affected by both government and private sub-sectors. From the demand side, growth affecting factors were consumption and investment. Growth on consumption was mainly led by government consumption as household consumption tended to be low as a result of weak purchasing power due to increasing inflation.

Similar trend was also presented by the result of Business Activities Survey (SKDU) conducted by Bank Indonesia. The second quarter of 2008 recorded 17.29 points in growth of business activities, put of which trade recorded as the highest contributor with 8.27 points followed by hotels and restaurants which recorded an increase of 5.51 points. The figures confirmed significant domination of trade, hotels, and restaurants as main contributors to growth of economy and business activities in Bali.

Decreasing number of unemployed work-force during the last two years indicated that achieved economic growth has shown positive impact in decreasing unemployment. However it was yet to utilize all unemployed work-force. Work-force utilized in business activities increased compared to the previous year.

On the other hand, consumer price index during the second quarter of 2008 in Denpasar increased from the same period of previous year. At the end of the second quarter of 2008, year on year inflation rate was 7.71%, an increase from 7.12% recorded in previous quarter. Man contributor to soaring inflation was food as a combined result of seasonal cycle and international price on raw food. Transportation has also significantly contributed to inflation rate, especially as a result of increasing price of fuel. Survey on business activities recorded increase of 11.32 points, from 21.02% to 32.32% during the second quarter of 2008.

Whilst the growth was predicted to continue in the third quarter of 2008, agricultural sector was predicted for growth contraction due to low productivity and absence of integrated holistic policy.