World Bank: Indonesia Takes The Lead as ASEAN's Largest Economy

	Opportunities For Trade, Investment Cooperation Between Vietnam, Indonesia
	Potential For Economic Cooperation Between Vietnam And Indonesia

In particular, WB believes that this country's economic achievements in recent times have been supported through the government's macroeconomic policies, attracting foreign investment, and sustainable development.

"Indonesia's economic achievements are largely due to the government's strong macroeconomic policy framework, which helps attract investment and abundant capital," said World Bank Director for Indonesia and Timor-Leste Carolyn Turk on June 24.

Photo: Gunawan Kartapranata / CC BY-SA

In the latest report titled Indonesia Economic Outlook June 2024 edition, WB stated that credit default swap rates and JP-Morgan Emerging Market Bond Index (EMBI) spreads in Indonesia have continued to decline since the COVID-19 pandemic and are lower than some peer countries. The credit rating agency also maintains an investment grade rating for government credit, which includes a stable outlook, thanks to which Indonesia has been successful in weathering external shocks, attracting investment and growth support.

"It is important to maintain prudent, credible and transparent macroeconomic policies, while creating fiscal space that allows spending on social protection as well as investment in human capital and infrastructure," said Carolyn Turk.

Also, WB estimated that the Indonesian economy will grow sustainably at a steady pace in the coming years thanks to increased public spending, increased business investment and stable consumer demand. Indonesia's gross domestic product (GDP) growth is forecast to average 5.1% per year from 2024 to 2026, despite facing growing headwinds from falling commodity prices, Food and energy price volatility is increasing, as is geopolitical instability. Indonesia's GDP growth of 5.1% in the first quarter of 2024 is still high and exceeds the average growth rate of middle-income countries.

The consumption of the private sector accounts for 57% of GDP growth, reflecting consumer confidence supported by falling non-food product inflation, rising civil servant salaries and good consumer services performance. On the other hand, consumption of the public sector increased again in the first quarter of 2024, thanks to elections and social spending.

"This is a positive reason to boost Indonesia's economy despite the decline in net exports due to weak global demand and falling commodity prices," Turk stressed.

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