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Indonesia – The next $1T economy | Insight Asia

English: Southeast Asia with Thailand, Cambodi...

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While countries like Vietnam, Malaysia and Phlippines could weel browbeat others like Pakistan in the growth equation in the next ten years, including erstwhile minnow Bangladesh, Indonesia will go well past the $350 bln expected at thse next 11 countries to actually knoc the doors of the $1 tln neighbourhood, taking its place right next to India and China and posing a threat to the efficient Tigers of South Korea and Singapore or the Chinese Hongkong and Macau SARs.

Helping Indonesia is its known character as a prefered post retirement destination for Americans who choose to live outside to save precious post retirement dollars and competing with destinations like Latin America

Domestic GDP grew at a high 6.5% in the December quarter for Indonesia, even as a global export slowdown hits most Asian ports and countries like India, China and Indonesia rely on domestic trade esp in Services and continuing basic growth in consumption of goods.

Even as Wen Jiabao gets ready to relinquish office in August in Greater China, even Wen has been championing Democracy and strong reforms in the business and political fabric of China. As with other regional democracies, the World’s 3rd most populous democracy(CIA Factbook) The hot and humid Indian Ocean climate covers 6000 inhabited and 11,508 other uninhabited islands that make up the nation from Burma/Malaysia to Papua New Guinea in the east and has more than 150 mln people eligible to join the workforce

The Bank of indonesia has been actively cutting interest rates but inflation is at a 3 time high and rates are already as low as 6% While Korea and Japan look tor ejuvenate corporate product in the North thru international deals , many including China; Indonesia with a 2011 GDP of $860 bln, is one of the few relying on agricultural exports with Agriculture making 38% of the labor force and only 15% of the GDP. Services also form only 40% of the GDP including Tourism while Japan and China are the most important export customers and Singapore and China account for one third the imports. The agrarian bent is likely just for tis captive markets for plywood, textiles, rubberand is a recent powerhouse in Oil & Gas exploration

The budget has been fairly balances with a 1.5% deficit and a 0.5% or $5 bln trade balance from $200 bln of annual exports, just 25% below Indian exports.

While it receives more than $100 bln in FDI , most of it is neighbours and it is actively looking for support for its Energy resources in Oil as well as Electricity production. It exports $40 bln of FDI

Even as Muslim populations in Asia become more concentrated in Pakistan in the next two decades, India and  Indonesia will be growing younger working populations while China declines in terms of working population available

The Indonesian GDP may cross both Mexico and Russia from the top 7 emerging Economies in four decades and is ranked right behind Japan by 2050 according to the PWC report “The world in 2050” and at its current growth rate, beat the Top 3 EU economies including the UK

Goldman SAchs Economic research








Indonesia’s GDP will hit $2 Tln in the next ten years if it works to a target 7% GDP growth rate like Vietnam, where Bietnam and Bangladesh would top off at $300 mln by 2050. Apart from being more urbanised and having a large share of Trade in GDP, Indonesia retains domestic demand for its largely literate population. Even Phils is unlikely to cross $650 blni n GDP in that period. GDP has already doubled in Indonesi since 2006

The Indonesian Rupee is a good forex candidate, swith free FX trading keeping active currency speculation another financial opportunity ahead of its other smaller neighbours even as it imposes capital controls on infrastructure and industry

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This entry was posted on February 6, 2012 by in Financial Markets and tagged , , , , , , , , .


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