Indonesia is Southeast Asia’s largest economy – a growing powerhouse with a nominal GDP of US$1.05 trillion. According to government data, Indonesia's GDP is expected to grow 5.3% in 2022 and 5.2% in 2023. In contrast, the International Monetary Fund predicts economic growth in the Asia-Pacific region to slow to 4.2% in 2022.
The country is also the world’s fourth-most populous nation, where the median age is 29.7 years.
Indonesians aged 30 and below constitute about 50% of the country, driving spending trends. For the next 23 years, consumers of the productive age will be dominating the population.
A new report claims that Southeast Asia’s digital economy could be worth more than US$200 billion in 2022, outpacing previous projections. Indonesia is a major driver of this trend, contributing US$77 billion in 2022 – a figure projected to grow to US$130 billion by 2025. During the pandemic, Indonesia added nine unicorns in digitally adapted industries like fintech, e-commerce, F&B, and logistics, bringing the total to 13.
Not surprisingly, Indonesia is a popular destination for Foreign Direct Investment (FDI). In 2021, FDI in Indonesia increased by 8% to US$20 billion, with investment from Southeast Asia and Asian economies, such as China, Japan and Korea, accounting for more than 90% of total FDI inflows. FDI in finance contributed to around 9.5% of total FDIs at US$1.9 billion.
Across the region, in the first half of 2022, for the first time, digital financial services overtook e-commerce in terms of securing funding and capital raising, signaling the prime opportunities in this market.