What makes Indonesia the King in Southeast Asia?
Indonesia, is seen as a future economic giant. It is the largest economy in Southeast Asia, and the world's seventh by purchasing power parity, according to World Economics 2022. The country’s GDP, constitutes more than one-third of the economy in the region.
Indonesia is a market economy with abundant natural resources, a young, large, and burgeoning 277.7 million population, a labor force of 135 million people as of 2022, and with political stability.
The country changed from being an economy that was highly dependent on agriculture, into a more balanced economy which is lessening its traditional dependency on primary exports.
The agricultural sector contributes to 13.3% of the country’s GDP and employed 29% of the active population in 2022. The industry contributed approximately 39.9% of the GDP and employed over 23% of the labor force, while the service sector, (the financial institutions, transportation, and communications) contributes to 42.8% of the GDP and employed around 48% of the active population in 2022.
So what makes Indonesia, the biggest economy in Southeast Asia?
Aside from being the economic giant in the region, Indonesia is also the most populous and the biggest country in terms of land area, in whole of Southeast Asia.
The usual key drivers of the economy are private domestic consumption, stimulated by its huge market with a growing middle class of over 70 million people which constitutes 55% of GDP.
The services and Industry are the main contributing sector of the Indonesian economy with a combined contribution to GDP of 82.7%, and employing 71% of the country’s workforce.
The industrial sector includes the manufacturing of textiles, cement, chemical fertilizers, electronic products, rubber tires, clothing, and shoes, most of these are for the American market. Wood processing is also a major activity as the country is one of the world's largest timber producers.
In the service sector, Tourism is a major source of revenue, though Thailand remains the region’s most visited country, Indonesia was expecting to become a leading Asian and World tourism destination by 2045 with 73 million tourists. The country is still waiting for the positive effects of the world borders opening.
Indonesia holds the spot as the biggest oil producer in the region, with the production of about 743,000 barrels per day in 2020. These account for 12% of the country’s GDP. The country is also the second-largest exporter and producer of palm oil.
The country is the only Asian nation to have been a member of the OPEC, although its membership is frozen since December 2017, because it would not agree to production cuts mandated by OPEC.
Indonesia became the world's largest exporter of thermal coal used in power stations in 2019 and has two major customers, China and India, the planet's two largest coal importers.
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