People migrating from the countryside to cities, a rising middle class and abundant natural resources are three key factors that could make Indonesia one of the world’s 10 largest economies in 2020 and among the top six in 2030, Standard Chartered said in a report last week.
Indonesia’s economic growth since the 1997-98 Asian financial crisis “has often been overshadowed by the rise of China and India,” the British bank said in a special economic report on Indonesia. “However, given its track record in recent years and the large size of its population, we believe Indonesia deserves a prominent place on the radar screen of international corporates and investors.”
The lender pointed out that Indonesia, which has a population of around 240 million, is the biggest economy in Southeast Asia and is a member of the Group of 20 nations.
“We believe its importance will continue to rise in the years ahead,” according to the report, which was written by a group of analysts including Tai Hui, regional head of research in Southeast Asia, and Fauzi Ichsan, senior economist in Jakarta.
The bank expects Indonesia’s current $708 billion economy to rise to $9 trillion by 2030, which would make it the largest economy in size after China, the United States, India, Brazil and Japan. Indonesia’s economy would be bigger than Germany, Mexico, France and Britain, according to the lender.
Standard Chartered forecast that in the next 20 years, Java, which makes up 7 percent of the country’s total land area and is home to the nation’s capital, will be home to fewer people. Last year, it was home to 58 percent of the population.
The bank said that in 2020, the island would be home to 55.8 percent of Indonesians and 53.9 percent in 2030. Improvement in transportation infrastructure and faster economic development in outer islands will draw more people to move to cities outside Java, the bank said.
The total size of Indonesia’s middle class may rise to 171 million in 2020, or 63 percent of the population. In 2030, it may reach 244 million, or 78 percent of people living in the country.
Indonesia, a major producer of coal, tin, copper, gold and agricultural products, could further benefit as prices for commodities are expected to continue rising in the coming years, it said.