Indonesia is known to be the country in Southeast Asia with the largest economy. It is also considered as one of the world’s emerging market economies. The country is a part of the G-29 major economies and is has a classification of a newly industrialized country. The government is playing an important role when it comes to the market economy of the country since it has enterprises that are state-owned and it administers in the prices of basic necessities such as rice, fuel and electricity.
Economic and Financial Crisis
After the economic and financial crisis that has began in the middle of 1997, the government took the custody of certain portions of the private sectors’ assets. This is made through acquiring bank loans that are nonperforming and other corporate assets by restricting debts. By 1999, the country’s economy recovered from the crisis and its growth has increased to more than 4 to 6% in the previous years.
In late 2011, the country has regained the investment rating grade from the Fitch Rating and in 2012 the Moody’s rating. Indonesia has lost its investment rating grade in December of 1997 as the Asian financial crisis onset. This is the moment where the country has spent over Rp450 trillion of $50 billion for bailing out lenders from various banks.
Through regaining their rating, Fitch has raised the country’s long time and currency rating for its debt from BB+ to BBB- having both ratings stable. With this, Fitch has also projected that the country’s economy would grow for about 6.0% as an average yearly until 2013. This is despite of the less conducive economic climate globally. On the other hand, Moody’s has raised the country’s local and foreign bond ratings of the currency from Ba1 to Baa3 having a retained outlook. As 2012 ends, the country has edged out another Asian country, India, and got the 2nd place to be the fastest major economy in G-20 just after China.
Changing Economic Conditions
With the previous year, the economy of the country inflated wherein the deficit has widened and the rupiah has depreciated. The growth in the gross domestic product has slowed down in January to June with 5.9%. Though there are inflations happening in the economy, the growth in the rate of investment has moderated while the private consumption maintained to be buoyant. Despite of the slowed growth in the economy, the country’s economy still generated new jobs in 1.2 million that outnumbered the new entrants in the labor force.
The GDP of the country in nominal is $894.9 billion while the GDP by PPP is $1.212 trillion. It gained a GDP growth of 5.78% in 2013, which can be maintained as long as the country manages to retain the economic strategies that it is doing. For 2014, it is projected that the GDP per capita of the country would reach $5,477.
These projected statistics when it comes to the GDP and economy of the country are sure to make the future of the country in its best. It is sure to maintain the ranking of Indonesia and prevent experiencing any crisis with the market economy used by the country.