Constraints to Indonesia's Economic Growth
Indonesia's macroeconomic fundamentals remain solid despite the recent growth slowdown. However, vulnerabilities remain due to its open economy, increased dependence on private capital inflows, and widening external imbalances.
In the near–term, growth is likely to be influenced by continuing weaknesses in global economic activity, weak international commodity prices, and rising foreign financing costs. In the medium–term, however, Indonesia’s growth prospects are good. Rising domestic demand, productivity improvement, increased urbanization, the shift of labor from agriculture to manufacturing and service sector activity, and increased trade and investment flows should drive higher rates of economic growth and development.
About ADB Papers on Indonesia
The ADB Papers on Indonesia are designed to provide information, analysis, and advice on issues of interest to Indonesia's development stakeholders. The series is produced by sector experts and maintained by the ADB Indonesia Resident Mission.