Indonesia Economy

As Indonesia moves into 2011 with excellent prospects for long-term growth, its place alongside giants China and India as one of the most important economies in the world is being increasingly widely acknowledged.

As the year comes to a close, Indonesia can look back on 2010 with no small degree of satisfaction. The economy is performing well, foreign investment is on the rise and there is continued political stability. However, concerns linger over rising inflation and the sustainability of the current growth cycle.

Indonesia’s economy is continuing to power ahead, with strong domestic growth and rising demand for export products. However, concerns remain over a potential inflation breakout due to overheated consumer spending fuelled by low interest rates.

The Bank of Indonesia, the country's central bank, called leading bankers to a meeting last week to discuss new regulations aimed at increasing bank lending. While Indonesia's banking sector has remained relatively robust over the last 18 months, there are concerns that banks are not doing enough to offer credit to certain sectors of the economy, a situation that is stifling potential growth.