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Our latest research trip to Indonesia has left us with mixed feelings about the country’s economic landscape. While we see fresh hope with the new president assuming office this past October, we also have concerns about the underlying economy. It faces weak consumption, a shrinking middle class, and slow economic growth in Java, the heart of Indonesia’s economy and politics. So, what gives, Indonesia?
Indonesia has always been a market of potential for foreign investors and has been hailed as a potential future powerhouse in the ASEAN region, driven by its rich natural resources, large labour pool, and an expanding middle class. However, despite these promising factors, the country’s equity market performance has not met expectations.
In our full piece, we discuss:
While Prabowo’s flagship programs hold the potential to strengthen Indonesia’s domestic economy, the critical question remains: can the new government effectively execute these initiatives? The involvement of numerous ministers from the previous cabinet helps to foster optimism for Indonesia’s future. However, addressing the challenges of declining domestic consumption power, a shrinking middle class, and lackluster growth in Java is essential for achieving sustainable economic growth. The path ahead is loaded with challenges but, with the right policies and execution, Indonesia can unlock its potential and navigate toward a more prosperous future.
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