With Indonesia, will the BRICs become the BRIICS?

(eToro Blog) As economic growth slows down persistently across much of the developed world, market players have taken a keener interest in some of the more prosperous emergent economies. Most investors are familiar with the BRICs, Brazil, Russia, India and, of course, China, which has, almost single-handedly, been driving global growth. But there are other opportunities outside of the BRICs and all of them share some of the same features besides economic growth and that is a fast growing populace, growing middle class and fiscal responsibility by the government.

Investors might be surprised to learn that Indonesia has the potential to become the next China. Indonesia has a population of more than 240 million and is the 4th most populated country in the world. Since 1998, it has had had a democratically elected government, and the growth rate has been in excess of 5% for much of the last eight years. Like the U.S. and Eurozone, it is a consumer-driven economy, with personal consumption accounting for nearly 65% of GDP. According to the most recent IMF forecast, Indonesia’s economy is set to growth at 6.1% pace this year, and will increase in 2013 to 6.6% and that domestic demand will continue to support that growth.

The remaining 35% of GDP is derived from Indonesia’s exports; besides being the largest thermal-coal exporter and tin exporter, they are one of the largest exporters of palm oil in the world. Palm oil has seen substantial growth not just as a cooking oil but as a fuel alternative and demand is likely to continue to grow globally, and especially in India and China. Coffee, rice and rubber are also among Indonesia’s top exports.

The IMF outlook suggests that Indonesia is well placed to weather the uncertain of the global environment given its solid fundamentals, structural reforms and prudent macroeconomic policy.

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