The world is changing so swiftly that sometimes something very obvious gets blurred and something out of blue catches your sight. Today, we are sitting with our fingers crossed deeply thinking who is going to be the economic power of tomorrow. People are betting their nickels on either China or India. The quick and smart calculations conclude no different outcome.
Does the next decade of economic development really belong to Asia? Absolutely. Is it China or India? Well, neither, and some people are ready to bet on this. They think it is neither China nor India, not even Malaysia and South Korea. Some people, in 2004-07 had this misplaced illusion that future belongs to Pakistan's fast growing economy. Perhaps they got carried away by short-term economic growth during Musharraf era. No more, Pakistan is not only out of the race, it is struggling for its economic survival.
People are now talking about a country which was relatively unscathed by the global financial crisis, its economy was projected to grow at a healthy 6.1 percent clip in 2010 and 6.3 percent next year, one of the fastest rates in Asia (and the world). What's more, its per capita GDP is projected to increase almost 20 percent in the next two years. Since 2009, this country has had Asia's second-best-performing stock market. A number of analysts are now suggesting that the BRIC (Brazil Russia, China, India) grouping might soon need to add another I.
Yes, this is Indonesia. According to The Stories You Missed in 2010, part of Indonesia’s growth is driven by the country's abundant natural resources. The country is a major exporter of timber, coal, and silver and its manufacturing sector is growing as well. Chinese clothing and furniture companies, which prospered by making goods for the American market, are now increasingly moving production to Indonesia, taking advantage of a free trade agreement between the two countries, which is just now coming into effect.
A peaceful and orderly presidential election last year reassured international markets of the country's political stability, and Indonesia's foreign direct investment increased 34 percent this year to $3.7 billion in the second quarter. Some obstacles remain, of course. The country's banking sector is still fairly undeveloped. This helped Indonesia avoid the worst of the market crash. Poor infrastructure and official corruption also continue to hamper development in many parts of the country, though arguably this is the case in China and India as well. Indonesia also has one of the world's highest deforestation rates, though it pledged a two-year moratorium on logging in May.
The country still has a poverty rate of around 14 percent, which increased slightly this year due to the financial crisis, but Deutsche Bank projects that 52 million Indonesians will enter the middle class in the next five years, a development with potentially monumental consequences. And it's not just an economic story: Indonesia stands a good chance of becoming the world's first Muslim and democratic superpower.