Indonesia is yet another emerging market to have exploded out of
the gates of the last recession. Over the last year, Indonesia's
exchange traded fund (
) is up 45%. As with any developing market, there's risk, but
Indonesia is laying out the canvas for a bright future.
Indonesia is blessed with a few characteristics that position it
for a bright economic future.
- Indonesia's population is young and growing.
- Jakarta, the nation's capital, is expected to be the largest
city in the world within two decades,
reports Berni Moestafa of BusinessWeek
- Domestic consumption makes up two-thirds of the economy. That
has helped shelter Indonesia from the last recession that rocked
the more developed and/or export-dependent nations.
- Low inflation has allowed the central bank to keep rates at a
record low of 6.5%. Inflation averaged 3.8% in the first five
months of this year. [
China ETFs, Rising Wages and the Trade
As a result, the IMF has forecast that Indonesia will grow 6%
this year, up from 4.5% last year. Trade Minister Mari Pangestu
believes the country can grow exports at 7% to 8.5%,
reports Jason Folkmanis of BusinessWeek
European demand remains a concern, but so far, the fallout in
Europe has not seemed to affect Indonesia's exports too much.
Exports grew 19.6% in the first quarter compared to last year.
According to Gita Wirjawan, chairman of the Investment
Coordinating Board of Indonesia, 6% to 7% growth is "pretty
much in the pocket." [
Why Indonesia Is On Fire.
For more stories on Indonesia, visit our
Market Vectors Indonesia Index ETF (NYSEArca:
Sumin Kim contributed to this article.