Reformasi Dispatch

Indonesia's Equivocating Economy

Aug 21, 2023

Discussion on Indonesia's GDP growth rate, the need for higher growth rate for investment, and skepticism about the current rate. Exploring the growth of digital banking, sustainability of Indonesia's consumer-driven economy, and dominance of e-commerce. The impact of lower commodity prices and challenges for the upcoming election.

40:14

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Quick takeaways

Indonesia's GDP growth rate of 5.2% is enviable, but to become a high-tech investment and manufacturing hub, it needs to achieve around 7% growth.

Consumer demand in Indonesia has been fueled by pent-up savings from the pandemic, with significant growth in digital banking and increased online purchases.

Deep dives

Indonesia's GDP growth rate and its potential

Indonesia's GDP growth rate of 5.2% is enviable, but to become a high-tech investment and manufacturing hub, it needs to achieve around 7% growth. Consumption has been a primary driver of growth, while exports have been less influential. The banking sector has experienced strong profit growth, with lower credit costs and an increase in digital banking usage. Funding costs for banks have gone up, but generally, the growth picture looks stable.

Introduction

2min

Indonesia's Economy and the Growth of Digital Banking

11min

Sustainability and Growth in Indonesia's Consumer-Driven Economy

10min

E-commerce Dominance and Low Dairy Penetration in Indonesia

2min

Impact of Lower Commodity Prices on Indonesian Economy

8min

Challenges of Continuing Widodo's Legacy and Indonesia's Auto-related Sector

7min

Send us a text

Earlier this month Indonesia government data showed the country’s GDP grew at an annualized rate of 5.2 per cent during the three months to June 30. It’s a rate of growth that would be the envy of most big economies not least because it has so far avoided triggering rapid price inflation while paralleling an overall improvement in government services.

The state of the economy has helped support a generally sunny outlook among Indonesia’s voters and their favorable views of their outgoing president, Joko Widodo, who is enjoying stratospheric approval ratings as a result. Widodo’s support is so robust that a nod from him to one of the three likely contenders vying to replace him may go a long way toward securing the top job. But it’s a not an episode of Reformasi Dispatch without a healthy dose of skepticism and this case is no different. Investment ought to be playing a much bigger role in driving Indonesia's growth. And while 5.2% is nice, GDP really should be growing at something closer to 7 per cent -- unseen in post Suharto-era Indonesia -- to soak up surplus labour and boost wages.

Joining Jeff and Kevin is Angus Mackintosh, founder of CrossASEAN Research and Insight Provider on Smartkarma. We recorded our interview on Wednesday Aug 16th. Flight cancellations and the Independence Day holidays wreaked havoc with our production schedule last week. We’ll be back with a full episode on Friday August 25th.

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Reformasi Dispatch

Indonesia's Equivocating Economy

Podcast summary created with Snipd AI

Quick takeaways

Deep dives

Indonesia's GDP growth rate and its potential

Strong consumer demand and shift towards online and offline purchases

Low household debt and increase in financing options

Investment opportunities and potential risks

Remember Everything You Learn from Podcasts