The International Monetary Fund have forecast that of the world’s 20 largest economies, India and Indonesia will be the fastest growing for 2023 and also over the next five years.
These two Asian economies are trying to grow in ways that are different to many emerging economies before them. As this article from The Economist writes:
For decades developing countries have followed a trusted formula for growing wealthier. Move workers from fields to more productive manufacturing jobs in cities, have them make goods for export, and watch the rapid formalisation of the economy. It worked in South Korea and Taiwan. In China it saw 800m people escape poverty. But today this scheme no longer works well.
Rather than focusing on manufacturing, Indonesia and India are focusing on different sectors of the economy. India has a strength in technology services, and currently accounts for 15% of the world’s IT services spending, which it wants to double down on. Indonesia, on the other hand, is blessed with natural resources critical to the global green energy transition, such as nickel. Estimates are that by 2030 it will be the world’s fourth-largest producer of “green commodities” and it hopes to build the economy by banning export of raw materials, forcing multinationals to process commodities onshore.
Both countries have grown quickly over the past decade and both are expected to continue growing in the coming years. This article from The Economist explores the similarities and differences between the two emerging economies to ultimately ask – which one will grow faster?
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