Indonesia: Trade and Investment Profile
Indonesia’s economy has expanded strongly over recent decades, notwithstanding the sharp economic contraction that occurred during the 1997–1998 Asian financial crisis. This strong pace of growth has seen Indonesia become an increasingly important part of the global economy. It is now the fourth largest economy in east Asia – after China, Japan and South Korea – and the 15th largest economy in the world on a purchasing power parity (PPP) basis.
Over time, the structure of the Indonesian economy has changed considerably. Historically, the economy has been heavily weighted towards the agricultural sector, reflecting both its stage of economic development and government policies in the 1950s and 1960s to promote agricultural self-sufficiency. A gradual process of industrialisation and urbanisation began in the late 1960s, and accelerated in the 1980s as falling oil prices saw the Indonesian Government focus on diversifying away from oil exports and towards manufactured exports.
From the mid 1980s, trade barriers were reduced and the Indonesian economy became more globally integrated. Since the Asian crisis, Indonesia’s relatively strong growth outcomes have been accompanied by reduced output volatility. Notably, economic growth in Indonesia slowed only moderately during the 2008–2009 global downturn, while there was a marked decline in output in most advanced economies and other east Asian economies (except China).
The government has pledged to enhance the country’s competitiveness by accelerating infrastructure development, improving human resource development, and implementing bureaucratic reforms. Consequently there are many examples of successful trade and investment opportunities in this emerging economy.
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