Sound Economy of Indonesia

 

 

 

Having a GDP size of over US$ 1 trillion in 2014, Indonesia is the largest economy in Southeast Asia. Much less affected by the global financial crisis than its neighboring countries, Indonesia’s economy grew by 5.8% in 2013, 5.01% in Q3 2014 and is expected to reach 5.1-5.5 % in 2014. Indonesia has the second highest economic growth among the G-20 economies. Future economic expansion is expected to include more inclusive growth as nominal per-capita GDP is expected to quadruple by 2020, according to Standard Chartered. McKinsey projected Indonesia will be the 7th largest economy in the world by 2030.

A large part of Indonesian economic success is a result of prudent fiscal stewardship that focused on reducing the debt burden. Indonesia’s debt to GDP ratio has steadily declined from 83% in 2001 to 26.2% in 2013; the lowest among ASEAN countries, aside from Singapore which has no government debt. 

As a result, by December 2013, Moody’s improved Indonesia’s credit rating to Baa3 (stable) while Standard & Poor’s put Indonesia on BB+ (stable) by April 2014 and Fitch put Indonesian rating to BBB- (stable) by November 2014. Thus the three rating agencies put Indonesia on investment grade status. The rating reflected Indonesia’s resilience to the global financial crisis, improving government and external credit-metrics, and an ability to manage domestic political challenges to the reform agenda. 

These achievements have increased the frequency with which Indonesia is being compared to middle-income developing nations like Brazil, India and Mexico. Economically strong, politically stable, reform minded, Indonesia is an emerging global powerhouse in Asia.

 

 

 

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