ASEAN Economic Report - December 2012
Indonesia grew by more than 6% in the first three quarters of 2012, reflecting the size and strength of the domestic market, lower dependence on exports and fewer international financial linkages than its neighbours. The finance minister expects the economy to grow by 5.9-6.3% in Q4 but we are slightly more cautious given that exports continued to fall in October. We forecast growth closer to 5.5% in Q4, which would mean growth of 6.1% for 2012 as a whole.
The government is targeting a record US$40bn in foreign investment in 2013; up approximately 25% from 2012. Indonesia is an attractive destination, with FDI drawn in by the resource sector, where previous underinvestment generates the possibility of large returns, and consumer product sectors, which are looking to take advantage of the large, young consumer market. If this is achieved then growth in 2013 will accelerate. But with the external environment still uncertain we expect FDI inflows to reach around US$21bn in 2013, and for the economy to grow 6.2%.
Laos’ economy is forecast to grow 8% in 2012. Agricultural production should pick up as the sector recovers from the adverse weather which affected 2011’s harvest, while a number of major construction projects are underway. The tourism sector is also expected to contribute to growth – arrivals were up 17% to 1.8m in H1 2012. Moving into 2013, GDP growth is expected to moderate to 7.3%, as the pace of recovery in construction and tourism slows.
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