Indonesia Investments Releases November 2024 Report: Demographics & Economy
On Friday (06 December 2024), Indonesia Investments released the November 2024 edition of its monthly report. It zooms in on the most relevant economic, social and political developments that occured in Indonesia in the month of November 2024.
Introduction
The month of November 2024 was quite a ‘political month’ as we witnessed a tense presidential election in the United States (won by Donald Trump who was also quick to threaten imposing big tariffs on those countries that try to move away from the US dollar), while we were also interested to see how Indonesian President Prabowo Subianto would perform in his first full month as president.
What was very interesting to see was that Prabowo decided to make state visits to a number of countries, including China and the United States, during the first couple of weeks of his presidency, suggesting that international relations are important to him. It also illustrates how Prabowo balances between the two biggest political and economic forces on Earth. Earlier, Prabowo had indeed emphasized that he does not want Indonesia to join specific political blocks on the world stage as he prioritizes a neutral stance (although he does seem to want to join the BRICS, an economic block), hence it makes sense that he visited both China and the United States. If not, it would give the impression he prioritizes one over the other. So, one could certainly argue that Prabowo showed some good diplomatic skills at the start of his presidency.
Moreover, Prabowo also managed to bring home various investment commitments from China and the United States: about USD $10 billion in commitments from China (while it was also reported in national media that China will contribute to Prabowo’s ‘free lunch program’ for school children, although it is not really clear (to us) in what way exactly China is going to contribute), and commitments from the United States to support Indonesia’s food sovereignty program. Meanwhile, China and the United States are both willing to work together with Indonesia for the purpose of renewable energy development in Southeast Asia’s largest economy.
However, in the remainder of this month’s report, we move away from politics a bit, and instead focus on the economy and population of Indonesia.
In the first article we present a detailed overview of Indonesia’s demographics, and how specific demographic trends impact on the (future) economy of Indonesia. One of the most interesting trends discussed in this article is that Indonesia has entered the transition to an ageing population. Although this is a gradual and somewhat slow process, it obviously has big consequences for the Indonesian economy as a whole, as well as for governance. In terms of governance, the Indonesian government – in the years and decades to come – will need to prepare for a couple of crucial matters, such as retirement programs (which implies pushing dozens of millions of people and businesses from the informal sector to the formal sector), and further improve the fiscal aspects of its national healthcare program. If it fails, then Indonesia could encounter quite some social turmoil in the future.
Meanwhile, two articles are devoted to Indonesian GDP growth. The first one gives an analysis of the gross domestic product (GDP) data that were released by Statistics Indonesia in early November 2024, covering the third quarter of 2024. The second one is an analysis of the latest macroeconomic indicators (such as retail sales, credit growth, consumer confidence, and car sales) to assess the economic performance of Indonesia in the last quarter of 2024.
The fourth article in our report covers the topic of provincial minimum wages across Indonesia. November is typically the month when next year’s minimum wages are determined. This year however, there’s still some uncertainty as a crucial Manpower Regulation is yet to be released. Interestingly enough though, Prabowo did mention in a speech (given in late-November 2024) that the minimum wages are going to be raised by 6.5 percent), seemingly suggesting that the government is back adopting a ‘one size fits all’ method to determine the provincial minimum wages (whereas the previous cabinet moved away from that method as it caused widening differences between minimum wages across provinces).
Also, as usual, we take a close look at Indonesian inflation. While headline inflation has remained remarkably low, core inflation has been creeping up, suggesting that purchasing power is doing alright in the Archipelago. However, we have heard many complaints from business-owners about disappointing sales this year. And, indeed, recent data from Statistics Indonesia shows that there has been a mild increase in the national unemployment rate in Q3-2024, while the rupiah has been weakening (against the US dollar) implying it becomes more expensive to import raw materials, capital goods and consumer goods. And so, while Indonesian media regularly report about weakening purchasing power, it is actually a bit unclear to us. National retail sales in fact show a positive trend (with the notable exception of national car sales, which is probably related to the high interest rate environment of Indonesia).
For a complete overview of topics in this month’s report we advise the reader to take a look at the table of contents.
Richard van der Schaar, MA Indonesian Studies
Managing Director
Indonesia Investments
Yogyakarta, Indonesia
2 December 2024
Order the full November 2024 report here. The report (an electronic report, PDF, in English) can be ordered by contacting us through email and/or WhatsApp:
- info@indonesia-investments.com
- +62(0)882.9875.1125
Price of this report:
Rp 150,000 (or equivalent in other currencies)
Take a glance inside the report here!
