Half-time in Indonesia’s Economic Growth

Last week, Washington, D.C. was the site for two big events on Indonesia and its economic prospects. The events featured speakers from the Asian Development Bank, The World Bank, Castle Asia, The National Bureau of Asian Research and The United States-Indonesia Society, all of whom point to an increasingly important role for Indonesia in the global economy and to the characteristics that make the country a peculiar case in development.

As largest economy in Southeast Asia with around 250 million people, Indonesia has enjoyed continuously high GDP growth rates (the latest announced this month still show surprisingly high growth). It distinguishes itself as its growth has been driven by domestic demand, not western demand that is seen in many other Asian countries such as Thailand or Vietnam. Domestic demand has in turn provided padding for Indonesia while demand from western countries has slowed down.