Indonesia’s economy is likely to remain immune from the impact of the global turmoil, shielded by rising investment and domestic consumption that will spur growth in the next few years, the OECD says.
Indonesia’s economic growth will expand by an average 6.4 percent from 2013 to 2017, which would put it among the fastest growing among the 10 members of the Association of Southeast Asian Nations, according to the Organization for Economic Cooperation and Development in a report released on Sunday.
“Domestic demand growth, and particularly private consumption and investment, will be the main drivers of growth in most Asean countries,” Rintaro Tamaki, deputy secretary-general of OECD, said at the Asean Business Summit in Phnom Penh on Sunday. “Growth will be less reliant on net exports than in the past. The expansion of the middle class is likely to continue to boost domestic demand.”
While growth in Indonesia will be above 6 percent, other Asean members are forecast to expand at a slower rate — Malaysia at 5.1 percent, Thailand at 5.1 percent and the Phillipines at 5.5 percent, according to the OECD report.
Indonesia’s economy, which the central bank forecasts to expand by 6.3 percent this year, expanded 6.2 percent in the third quarter. Investment and domestic consumption remain the main drivers for the nation’s growth. The country has the biggest economy — at $850 billion — in Southeast Asia.
The economic outlook for Indonesia will be marked by the country’s efforts to boost infrastructure spending on roads, seaports as it lures more foreign investors.
Chatib Basri, chairman of the Investment Coordinating Board (BKPM), said last month that foreign direct investment is forecast to reach $25 billion by the end of this year. Such investment totaled $12 billion in the first half, according to data from BKPM.
Trade Minister Gita Wirjawan told reporters in Phnom Penh on Sunday that the region would remain the preferred investment destination among foreigners.
“We are very attractive to them now,” he said.
Attracting investors to Southeast Asia is its combined population of 600 million people with an economic force of $1.8 trillion.
Gita — quoting a survey of 1,000 businessmen worldwide this year by the Lee Kuan Yew School of Public Policy at the National University of Singapore — said 35 percent of them pointed to Asean as the best investment destination.
The region attracted $117 billion in foreign direct investment in 2011, up 26 percent from 2010, according to World Investment Report 2012 by United Nations Conference on Trade and Development.
That accounts for 7.7 percent of total investment in the world, and outperforms East Asia in terms of growth.
East Asia, which includes China and Japan, registered 9 percent growth to $219 billion in 2011.