Investors look to Indonesia's neighbors

Featured - July 19th, 2012
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Indonesia was once the ‘golden boy’ of the region: it was the largest economy in Southeast Asia and attracted investors during its consumer and commodity-led boom. But the cooling economy – battered by rising inflation, falling commodity prices and protectionist policies – marked the plight of investors.

This also means that other Asian countries can take their turn in the spotlight, particularly Thailand and the Philippines. According to Wall Street Journal, Indonesia’s benchmark index rose 1% compared to the 20% growth in the Philippine stock market and Thailand’s 13%.

The Philippines was seen as a pleasant investment environment under the Aquino administration’s campaign against corruption. Thailand, on the other hand, recovered from last year’s devastating floods with a growth of 5.5% this year compared to the previous year’s 0.1%, according to HSBC. However, both economies still face domestic problems: the Philippines’ crumbling and overloaded infrastructure and Thailand’s turbulent politics.

According to the Journal, Indonesia’s economy is holding up despite the gloomy forecasts. Still, economists and analysts warned that the country faces trade deficits and inflation.