Are Indonesia’s businesses prepared for a downturn?

Nader Elkhweet
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PREMIUM

Jakarta / Mon, September 23, 2019 / 06:05 pm

Are Indonesia’s businesses prepared for a downturn?

For one thing, with a 7-percentage-point increase since 2006 in the share of Indonesia’s exports that go to China, the country is more exposed to China, where growth has almost halved. (Shutterstock/Number1411)

Despite a long run of strong economic growth in Indonesia and Southeast Asia, the next global recession could have serious effects here. It’s a turbulent world, and while Indonesia relies less on exports than other countries in the region, some of the traits that cushioned Indonesia during the global financial crisis a decade ago offer less of a buffer today. For one thing, with a 7-percentage-point increase since 2006 in the share of Indonesia’s exports that go to China, the country is more exposed to China, where growth has almost halved. An ongoing United States–China trade war might further slow China’s growth. Commodities’ contribution to Indonesia’s gross domestic product (GDP) has dropped from 29 percent to 22 percent, and prices could fall further. In addition, Indonesia’s corporate and household debt have risen significantly as a shar...