Economy

Bulletin

5.6% growth expected in 2017

Asian powerhouse Indonesia continues to register strong growth, emerging as one of the region's top performers in 2016, with 5% growth that is set to jump to 5.2% in 2017 and beyond.

The country’s success amid a global slowdown can largely be attributed to its strong fundamentals—low debt levels, strong domestic consumption, and a robust manufacturing sector—and the government’s economic policy packages launched throughout 2015-2016.

Furthermore, investment growth, a key indicator of economic health, is set to increase from 4.5% in 2016 to 5.6% this year, helping to compensate for an expected reduced government spending and lower commodity prices. The government released a string of reform packages over the past year to improve the business environment and with interest rate cuts on the horizon, inflation is also expected to remain stable.

One key issue for the government will be boosting Indonesia’s electricity production and distribution to facilitate economic growth. Meanwhile, Indonesia’s micro, small, and medium enterprises (MSMEs) will continue to play a key role in driving the country’s economy, while fintech developments in the finance sector will similarly help broaden the market. Commodity exports, meanwhile, are expected to grow alongside the increase in the prices of palm oil, rubber, and coal. With the right factors in place, Southeast Asia’s largest economy will continue to be a star performer in the coming years.

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