Indonesia Rising

Everyone knows the two countries in the world with the largest populations: China and India. But what countries are next on the list? The United States is third, with 331 million people. And fourth in the total population is Indonesia, with 265 million people. When it comes to the total size of the economy, Indonesia is now about 9th, similar to UK and France (using the purchasing power parity exchange rate). By 2050, Indonesia could also be the fourth-largest economy in the world, behind China, India, and the United States.

If this is making you feel as if you perhaps should know more about Indonesia's economy and prospects, a useful starting point is Realizing Indonesia’s Economic Potential, a 13-chapter book edited by Luis E. Breuer, Jaime Guajardo, Tidiane Kinda for the IMF (August 2018).To wet your whistle, here are a few comments from the opening chapter, "Realizing Indonesia’s Economic Potential: An Overview," by Luis E. Breuer and Tidiane Kinda. As they explain, the country has carried out a number of economic reforms since the East Asian financial crisis back in 1998:

"A deep decentralization program replaced the system of centralized government and development planning, giving greater direct authority, political power, and financial resources to regencies and municipalities. Local governments’ responsibilities were expanded in health, primary and middle-level education, transport, agriculture, manufacturing industry and trade, capital investment, land, and infrastructure services. ...

"A wave of reforms reduced the dominant role of the government in the economy—a legacy of the postcolonial period—and began a shift toward a more market-based economy. Policy frameworks and toolkits were upgraded, including adoption of a floating exchange rate, fiscal rules that limited the deficit and capped public debt, and an inflation targeting regime. The banking sector was also restructured, and regulation and supervision were overhauled ... Various sectoral reforms were implemented to open up the economy and improve the business environment, including privatization of some state-owned enterprises, elimination of monopolies in some sectors, and reduction of general subsidies. More recently, fuel and electricity subsidies were more effectively targeted to low-income households; the land acquisition process for infrastructure projects was streamlined and made more flexible; the foreign direct investment (FDI) regime was partially liberalized, including for logistics, tourism, and agriculture; and the setting of the minimum wage was made more transparent and predictable ..." 
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Gary Anderson 10 months ago Contributor's comment

I believe this narrative. Yes, weakness in China could bring weakness to Indonesia. But Trump pushes Indonesia away while Asia bonds. This is bad news for tariff warriors but good news for world stability in the long run. www.talkmarkets.com/.../are-policy-refugees-jumping-the-trump-tariff-ship