Indonesia Economy

While many markets struggled with debt and fall-out from the world economic crisis in 2011, Indonesia bucked global trends by recording its fastest rate of growth in 15 years. Buoyed by strong domestic demand and huge resource wealth, Indonesia’s economy grew 6.46% last year, making it a magnet for investors who have also been attracted by its macroeconomic stability.

In spite of the economic uncertainty that characterised much of 2011, Indonesia’s strong growth has solidified its reputation as one of the world’s most important emerging economies.

Plans are in place to develop Indonesia’s nuclear power capacity to overcome the country’s shortage of electricity and ease its dependence on hydrocarbons. However, some concerns remain as to the safety of atomic energy in a quake-prone region so soon after the disaster in Japan, with opponents to the scheme pushing alternative energy as the answer to Indonesia’s power needs.

Indonesia is confident it can ride out any waves whipped up by the storm affecting much of the global economy, thanks in part to its low dependence on exports and booming domestic demand. There are some concerns, however, that reduced interest rates and high consumer spending could reignite inflation.

With live cattle exports from Australia to Indonesia resumed and plans for banking investment and a free trade deal in the works, burgeoning economic ties between the neighboring countries seem back on track.

A recent wave of investment in manufacturing in Indonesia could herald the country’s rise as an international industrial player. A rapidly growing domestic market of more than 230m people, as well as the potential for exports both regional and across the globe, are major draws for companies from around the world.