Reports
12 February 2020

What will it take for Indonesia to start growing again?

In Indonesia, growth has been hovering around 5% since 2012 and household spending has shown signs of moderating. President Jokowi has pledged reforms to attract foreign investors while also unveiling a $178 billion budget for 2020, focusing on infrastructure and human capital development. But will these measures succeed in lifting growth?

Executive summary

The protracted trade war between the US and China hit Indonesia hard last year, with exports contracting for nearly all of 2019.

Full-year growth likely settled at 5.1%, missing the downwardly revised government growth target of 5.3%.

In 2020, the outlook largely hinges on investment activity rebounding, given that the coronavirus in China will hit exports and related manufacturing activity. 

China remains Indonesia’s main export destination and import source, making the 2020 landscape all the more challenging.


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