Indonesia has been applauded for its prudent monetary and fiscal policy, but it isn’t immune to global risks that could adversely impact growth. In a new research briefing, Zhouchen Mao, Head of Research and Advisory at Asia House, takes stock of Indonesia’s economic trajectory, key growth sectors, and the wider investment outlook.
- Indonesia has proven resilient to challenging global macroeconomic conditions in 2022, a role it will likely maintain in 2023 as the global economy continues to be buffeted by uncertainty and volatility.
- While Indonesia has been applauded for its prudent and responsive monetary and fiscal policy, it is not immune from global risks that could adversely impact the economy’s growth trajectory. These include global monetary tightening, a strong US dollar, a slowdown in global trade, and falling commodity prices, as well as China’s economic downturn.
- Notwithstanding the external risks, Indonesia remains an attractive destination for foreign investors, particularly in priority areas identified by the government, including downstream industry, infrastructure development, and the digital economy.
- The government’s increasing emphasis on downstream developments could attract foreign investments, increase productivity, and enable Indonesia to move up the value-chain, which will in turn stimulate value-added exports.
- Indonesia’s focus on infrastructure developments will not only boost growth, but also bodes well for the country’s attempt to capitalise on US-China competition and ensuing efforts by some multinational corporations to de-risk their supply chains amid calls for friend-shoring.
- There remain untapped opportunities in Indonesia’s e-commerce sector, fintech platforms, and online education, as well as internet connectivity, despite possessing Southeast Asia’s fastest growing digital economy.
This Asia House report provides an assessment of the country’s macroeconomic conditions and potential risks, followed by a close examination of the sector-specific investment opportunities associated with Indonesia’s economic development priorities.
READ THE BRIEFING HERE
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