Why Indonesia’s Economy and ETF May See Higher Growth

| About: VanEck Vectors (IDX)

Indonesia is doing something right and its economy, as well as its related ETF, may produce higher-than-expected growth in the coming years.

High spending on legislative and presidential elections along with increases in government expenditure disbursements allowed the World Bank to revise projections for Indonesia’s growth this year upward to 4.3% from 3.5%, reports Aditya Suharmoko for The Jakarta Post.

The World Bank estimates Indonesia’s economy will reach 5.4% growth in 2010, while the Indonesian government is shooting for a 5.5% growth target for 2010.

Indonesia’s domestic market and its low reliance on exports allowed the economy to dodge the full force of the global financial crisis. The country also has a strong banking sector and sound macroeconomic management.

The Indonesian government is continuing to disburse its stimulus, which is driving up domestic demand, a key factor in the country’s economic growth. The government believes deficit will run at 2.4% of GDP for 2009, while the World Bank forecasts a 2.2% GDP deficit.

  • Market Vectors Indonesia ETF (NYSEArca: IDX): up 34.5% in the last three months


Max Chen contributed to this article.