Indonesia’s oil and gas and heyday may have come to an end, with non-commodity sectors taking over as the engine of growth over the next ten years, according to a recent study by Fitch Group’s BMI Research.
“Growth in Indonesia will be far less commodity-centric than over the past decade, as the mining and oil and gas sectors will stagnate,” BMI Research said in its latest report, entitled Ten Emerging Markets of the Future. Indonesia is included in the top-10 list, along with the Philippines, Vietnam, Myanmar, Pakistan, Bangladesh, Egypt, Ethiopia, Kenya and Nigeria.
BMI Research forecast that annual oil output in 2025 would be 12.2 percent lower than in 2015, while rapid growth is predicted in non-commodity sectors in line with a major government drive in infrastructure and manufacturing.
Power network infrastructure, the automotive industry and consumer services such as e-commerce and health care are cited as the sectors that may drive growth in the next ten years.
Electricity generation is predicted to increase by 40 percent between 2015 and 2020, as the government embarks on a 35,000 megawatt (MW) electricity procurement program. For the automotive industry, annual vehicle production is expected to grow 42.7 percent between 2015 and 2020.
“Indonesia will develop as an increasingly important auto manufacturing hub within the Association of South East Asian Nations trading bloc, with exports growing strongly,” the report highlights, noting that 90 percent of production is sold domestically at present.
In the consumer services sphere, BMI Research expects e-commerce to enjoy one of the fastest growth rates, with 12.4 percent annual growth from 2016 to 2020.
BMI Research’s study also reveals that non-commodity sectors in other emerging economies will also grow strongly. Exceptions, however, are made for Egypt, with a growing natural gas business, Myanmar with mining, Pakistan with oil and Vietnam with oil refining. (est)
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