According to a recent report from seasia, Indonesia's GDP was an estimated USD 1.004 trillion in 2017, even though economic growth was probably lower than the 5.2% initially projected.

A significant contributor to this has been the liberalization of foreign investment regulations, which has boosted Foreign Direct Investment (FDI) inflows.

McKinsey and Co., an internationally respected global management consulting firm advises that in order for Indonesia to achieve its full potential, labour productivity will need to grow at an annual rate of 4.6%, which would be a 60% increase over the average growth rate this past decade.

Currently the world´s 16th largest economy, McKinsey estimates Indonesia could leap into 7th place (overtaking Germany and the UK) if it can increase productivity.

If bottlenecks in transportation, agriculture and fisheries and energy diversification can be tackled, Indonesia has the potential to unlock a further USD 1.8 trillion in business opportunities taking the country's GDP in excess of USD 3.7 trillion by 2030.

IHS, a leading global source of business insights, analytics and expertise, believe “this will significantly increase Indonesia’s global geopolitical influence as a leading emerging market, shaping international policymaking in global forums such as the G-20 and United Nations,” 

Indonesia has a large and fast-growing population, which currently sits at over 260 million people with estimates that it will increase by a further 90 million people over the next 20 years.  This growth, combined with fast-growing household spending by middle class households as well as rapid growth projected in a wide range of industries, is spurring domestic consumption.

Following Indonesia, three members of ASEAN were also projected to achieve this prestigious milestone: Malaysia, Thailand, and the Philippines. 

Sources: seasia, IHS, McKinsey and Co., World Population Review

This article was previously published on Gapura Bali

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