Indonesia: the fourth most populous country in the world, the largest economy in Southeast Asia

Being now in the last days of 2018, it is time for a short economic review of this year and a forecast for the next.

Like many other developing countries, Indonesia was hit by the trade war between the US and China, as well as by the Turkish lira crisis. The Indonesian rupiah fell to its weakest level in 20 years and to defend it, or discourage people from selling it, interest rates were increased (to 5.75%).

A positive from this year was the stabilization of markets for raw materials, as oil and gas cover 12.4% of Indonesia’s total exports.
Also, the fastest growth rate in the last 5 years was recorded in the second quarter of 2018.

Furthermore, Indonesia is recording increasing tax revenues thanks to its new 2015 policies. As a result, new infrastructure projects, among others, are being implemented around the country.

According to Danareksa (Financial Institution), 2019 will still be dominated by domestic investment and increasing export rates.

One big factor will be the holding of an election in the world’s third largest democracy, on April 17.
Even though the current, more moderate, President Joko Widodo will go into the election as the clear favourite – elections of the past have shown that a battle against his opponent, Prabowo Subianto, could provide a lot of surprises.

Nevertheless, President Joko Widodo has predicted an economic growth rate across the archipelago of 5.3% in 2019.
Indonesia is one of the biggest markets in the world, and will most probably be the fourth biggest economy by 2050.
It has already demonstrated great investment potential, in ever-growing areas like:

• IT and communication
• Manufacturing
• Construction
• Trade and hospitality
• Transportation
• Services

Main reasons to invest in Indonesia now are:

• Large workforce
  133 million workers
• Spending population
  Consumer Confidence Index at a nearly three-year peak
• Young population
  Median age is 28
• Growing middle class
  20% are now middle class, and 45% belong to the aspiring middle class
• Consumer behaviour
  According to the Global Consumer Confidence Survey™, Indonesia is the most optimistic country in the world
• Increase in investment security
  In the second quarter the Business Confidence Index reached a nine-year high

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Sources:

https://www.imf.org/en/News/Articles/2018/01/26/NA020718-Creating-Jobs-for-Indonesia-Youth-Five-Charts-That-Matter
https://www.indonesia-investments.com/news/news-columns/economy-of-indonesia-gdp-growth-at-5.27-in-q2-2018-tops-estimates/item8926?
https://www.indonesia-investments.com/news/todays-headlines/what-about-indonesia-s-gdp-growth-in-2019-and-beyond/item8977?
https://tradingeconomics.com/indonesia/forecast
https://tradingeconomics.com/indonesia/consumer-confidence
https://jakartaglobe.id/business/imf-cuts-indonesias-2018-2019-growth-forecast/
https://www.nielsen.com/id/en/insights/news/2018/indonesian-consumers-the-most-optimistic-in-Q2-2018-article.html