Emerging Markets - Opportunities & Threats: Indonesia (2024)

FAQs

Emerging Markets - Opportunities & Threats: Indonesia? ›

Not only is Indonesia becoming an attractive market for investors due to the growing middle class, growing political / economic openness, and potential business relations with the large, emerging markets of the Middle East, it is also an attractive market for providers of material handling and supply chain solutions ...

The reality, it is domestic consumption rather than exports and services rather than manufacturing or resources, that are the engine of the growth. With the youngest population in the Southeast Asia region, where 25% are under 15, Indonesia poses a massive consumer market.

Indonesia's economy grapples with challenges like dependence on natural resource exports, infrastructure gaps, regional disparities, and a need for skilled labor. Corruption, complex regulations, environmental issues, and income inequality also impede growth.

According to the World Bank's October 2023 economic report, Indonesia's economic growth is underpinned by a pick-up in private consumption and positive terms-of-trade. GDP growth is projected at 5.0 percent in 2023 and to an average of 4.9 percent over the medium term in 2024-2026.

The economy of Indonesia is a mixed economy with dirigiste characteristics, and it is one of the emerging market economies in the world and the largest in Southeast Asia. As an upper-middle income country and member of the G20, Indonesia is classified as a newly industrialized country.

The global commodity boom and a return of tourists is driving economic growth in Indonesia. South-East Asia's largest economy is also turning to transformative digital and green strategies as part of its next phase of development.

Risks of Emerging Markets

This risk can include political instability, domestic infrastructure problems, currency volatility, and illiquid equity, as many large companies may still be state-run or private. Also, local stock exchanges may not offer liquid markets to outside investors.

Even though the world economy at large has proven resilient, they point out that portfolio flows to emerging markets have experienced the most pronounced decline in more than a decade - driven mainly by outflows from Russia and China - and they have now been trending down for ten years.

Emerging markets often expand trade volume and develop more modern financial institutions. As they become more developed, they increase their chances of being profitable for investors. Factors that can influence an economy's transition include: growth in gross domestic product (GDP)

What is the biggest issue in Indonesia? ›

The Indonesian economy possesses sound fundamentals of social stability, strong domestic demand for goods and services, steadily increasing foreign reserves (about $137.5 billion in June 2023), and stable prices with moderate-to-low inflation.

To achieve such growth, it is important to continue implementing reforms that remove bottlenecks that limit efficiency, competitiveness, and productivity growth. Doing so will enable Indonesia to accelerate growth, create more and better jobs, and achieve its vision of becoming a high-income country by 2045.”

The Long-Term National Development Plan (National RPJP) is the national development planning document, which is the further specification of the goal for establishing the Government of the Republic of Indonesia, as contained in the Preamble of the 1945 Constitution, in the form of the vision, mission, and direction of ...

Indonesia's most important export commodities are oil and gas, minerals, crude palm oil, electrical appliances and rubber products.

Indonesia has a mixed economic system which includes a variety of private freedom, combined with centralized economic planning and government regulation. Indonesia is a member of the Asia-Pacific Economic Cooperation (APEC) and the Association of Southeast Asian Nations (ASEAN).

Indonesia's economic performance has been shaped by government policy, the country's endowment of natural resources and its young and growing labour force. Alongside the industrialisation of its economy, Indonesia's trade openness has increased over the past half century.

The country boasts an enormous labor pool, a growing middle class, and a vast wealth of natural resources. Standard Chartered Bank projected Indonesia's economy to grow from US$4.2 trillion in 2020 to US$10.1 trillion by 2030 to become the world's fourth-largest economy in terms of purchasing power parity.

According to their analysis, depending on the criteria used, the term may not always be appropriate. The 10 Big Emerging Markets (BEM) economies are (alphabetically ordered): Argentina, Brazil, China, India, Indonesia, Mexico, Poland, South Africa, South Korea and Turkey.