From Martin Armstrong, Armstrong Economics
Indonesia is another economy that deserves far more attention than it receives in the West. The world’s fourth-most-populous nation expanded 5.29% year-over-year during the second quarter of 2026, beating economists’ expectations of 5.10%. That followed an even stronger 5.61% expansion during the first quarter. For the entire first half of 2026, Indonesia grew 5.45%. While governments throughout the developed world struggle to produce 1% or 2% growth without enormous deficit spending, another major Asian economy is steadily expanding above 5%.
Indonesia is particularly interesting because this is not simply another export story. Household consumption, which represents more than half of the economy, increased 5.06% during the second quarter. Construction expanded 6.68%, accommodation and food services grew more than 10%, and manufacturing increased 4.52%. Indonesia has nearly 290 million people, and that enormous internal market provides something smaller export economies simply cannot replicate. As incomes rise, Indonesia increasingly has the ability to generate growth from within.
This is the same transformation I have discussed when looking at India and Vietnam. People can see an economy change in real time when growth begins producing physical results. Roads appear. Airports expand. Industrial parks are constructed. Factories open. Apartment buildings rise. People who never owned automobiles become consumers. Families that previously lived at subsistence levels begin spending money on travel, restaurants, electronics, education, housing, and financial services. That transformation becomes self-reinforcing because an emerging middle class creates entirely new industries around itself.
Indonesia also possesses something Europe desperately lacks: resources. It is the world’s largest producer of nickel, a major producer of coal, palm oil, copper, tin and other commodities, and the government has increasingly refused to remain merely an exporter of raw materials. Indonesia banned exports of unprocessed nickel ore and forced companies seeking access to its resources to invest in domestic processing. That decision helped produce an enormous nickel refining and smelting industry.
This is economic nationalism in its practical form. Why dig something out of the ground, ship it overseas, allow someone else to manufacture the valuable product, and then import that product back at a massive markup? Indonesia wants the factories, processing plants, employment, technology, and capital investment to remain inside Indonesia. The West may complain about these policies when they interfere with its own corporations, but Indonesia is acting in its own national interest.
Investment has remained a major component of this expansion. Gross fixed capital formation increased 6.87% during the second quarter as spending on buildings, machinery, vehicles, and productive equipment continued rising. During the first quarter, investment had already expanded 5.96%. This matters because consumption can produce temporary GDP growth, but productive investment creates the capacity for future growth.
Trade is expanding as well. Indonesian exports reached $140.81 billion during the first six months of 2026, an increase of 4.13% from the previous year. Non-oil and gas exports climbed to $134.58 billion. Imports increased much faster, reaching $137.24 billion, but Indonesia still maintained a $3.58 billion trade surplus during the first half. The surge in imports is not necessarily evidence of weakness when an expanding economy is importing machinery, industrial inputs, and capital goods required for production.
Indonesia’s demographics provide another enormous advantage. The median age is around 30, while Japan is approaching 50 and Europe continues aging rapidly. Indonesia therefore has millions of younger workers entering their most productive and consumption-intensive years. They will need homes, transportation, appliances, financial services, telecommunications, food, entertainment, and infrastructure. This is precisely the demographic foundation that supported the rise of countless economies before it.
There are certainly risks. Indonesia remains heavily exposed to commodity cycles. Rapid industrialization creates environmental problems, and government intervention can easily become excessive. President Prabowo Subianto wants economic growth to eventually reach 8%, and whenever governments become obsessed with hitting predetermined GDP targets, they inevitably risk wasting capital on politically motivated projects. Jakarta must be careful not to destroy the very private investment it is attempting to attract.
The government is already pushing aggressively to accelerate the economy. It has placed 200 trillion rupiah, roughly $11.2 billion, into state-owned banks to increase liquidity and lending, with the program now extended into 2027. Officials want growth to reach 6% this year as part of the effort to eventually achieve Prabowo’s 8% target. That type of intervention must be watched carefully because credit creation can produce artificial booms if capital is directed politically rather than economically.
Nevertheless, Indonesia’s underlying advantages cannot be dismissed. Nearly 290 million people, a young population, enormous natural resources, a growing manufacturing sector, expanding infrastructure, rising household consumption, and a strategic position between the Indian and Pacific Oceans create the foundation for a major economic power.
This is why looking exclusively at Europe, Japan, Britain, and Canada gives people a distorted view of the world economy. Wealth is not disappearing. Production is not disappearing. Opportunity is not disappearing. It is moving.
India is expanding rapidly. Vietnam is becoming a manufacturing powerhouse. Singapore is attracting international capital. Mexico is benefiting from the reorganization of North American production. Indonesia is using its resources, demographics, and domestic market to move further up the economic ladder.
The global economy is undergoing a geographic transformation. The old centers of economic power are burdened by sovereign debt, aging populations, taxation, regulation, and governments desperately attempting to preserve systems created during another era. Much of emerging Asia is still building.
Indonesia has spent decades sitting in the shadow of China, Japan, and India when Western analysts discuss Asia. With an economy growing above 5% and nearly 290 million people moving through this development cycle, that will not remain the case forever.
The sleeping giant is beginning to wake up.
Lmao Dowwardly Mobile Dave, – thats all you’ve got, you got slaughtered, the State won, you lost! Lmfao!
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Despite your pathetic online whining, the State and credit merchants did not steal your wealth, it was you, who cowardly submitted to the surrender of your wealth in exchange for the optionality of a non-intelligent and unproductive life of worthless imbecilic thinking.
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All the system does is provide the optionality, but only degenerates like yourself chose the option to be degenerate impoverished losers: that was always ‘your’ choice. You can spend the rest of life your crying about the State or credit merchants, and you will, because that’s all you own now, but it will not alter a thing, because the whining doesn’t reach anybody but yourself. Your a degenerate lifelong loser – try enjoying it.
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Anyway, the article has now dropped down to page 2, so its now downwardly mobile, its in your domain now DMD, so she’s all yours now.
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One last final reminder, don’t forget to try Youtubing, – you’ll earn three and half Benjamins annual salary, and if your content’s like your Chinese sources, the CCP will buy you plenty of coffees! [and maybe some soap?].
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He, he… Just one tiny spray and the resident Ubermensch triggers like a lab rat on cryptonite. lol
Lmao! – poor old Downwardly Mobile Dave, the forum disruptor, always there, loll! Well at least your BS has temporarily dried up.
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Like others of the under-achieving degenerate demographic, your life consists of crying in public about those who are successful. Do you really think those who drive capital are thinking about a whining degenerate old man? Do you not think they’ve got more pressing matters to think about?, do you think that your worthless arguments feature in their discussions? Because they do not. And crying like a big sissy won’t change a thing.
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There has never been an anarcho-capitalist libetarian society ever. There has never been a durable civilisation that has been absent of state. States exist and they persist because political coordination is fundamental to human nature. People will always demand courts to solve conflicts. People will always seek to band together for defence. They want to set rules for their particular societies. They want to build infrastructure. They want to tax the populace, etc. So, basically the anarchists are correct in the sense that the state is this abstraction of people who own the weapons and set the rules. 100%. That’s precisely what government is.
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But degenerates like yourself maintain this naive view that something is going to emerge and shatter that political coordination that is inherent in human nature. But in reality, what’s going to happen – and is happening – is that something is going to alter the monetary terrain beneath these institutions. The governments are already prepping this.
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And sure, the degenerates will come to the argument saying, yeah, but governments are just an abstraction of a group of people with the guns and set the rules. But the reality is those people, that group of people, this government idea, – well guess what? That group of people are now incentivised to get as much of that something as possible.
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And when they meet up they talk about this. Do your ideas feature in these conversations? Of course not, and why not? because your ideas are degenerate and worthless. So, whether you like it or not, and you won’t like it, the underlying monetary terrain has already been set. The state has already done so: they’ve got the weapons and they set the rules. And they’ve just set the new rules.
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We backed the new state, our horse came home, so we’re sorted. This group is the new driver of capital and soon enough they’re gonna drive it hard. So, you’ll just have to cry about the new situation, because thats what losers do, they lose. The state always wins.
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The world isn’t going to collapse and come down to your medieval level, that’s just a loser’s pipe-dream, because despite what your computer screen tells you, we’re all still going on holiday and generally having a good time, Moore’s Law applies to many things so gives us more and better for less, and we get it delivered to our door with the click of a finger.
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You failed to evolve, you got left behind, tough!, – that’s life. Nobody cares. That’s what it means to be a degenerate and irrelevant.
So, what are degenerates left with? Yup!, all they’re left with is an excess of time which they fill by trying to disrupt online forums with their degenerate thought processes; its nothing but a desperate attempt at using the relevance of others to negate their own irrelevance, an irrelevance which led nature to select them for biological extinction. But you failed, because you lost: the future belongs to those who evolve and the future is heading towards the Singularity, the new state is aiming towards the Singularity, and its been doing so since the dawn of the XXI Century. The new state won because it drives capital. You lost, lol!
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Don’t forget DMD, give Youtubing a try – its $360 bucks annual salary.
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Please spare us your Affluence and Effluence. Read your Coloxyl instructions properly next time. Your pills are working upside down for you.
Sure thing Downwardly Mobile Dave, rotffl, and look where your truth got you, lol, yup, I’ll say it again, – your understanding of downwardly mobile economics is 100% correct. You reached the bottom, you degenerated into the socialist sewer, had your wealth redistributed, so all you can do is cry about the credit merchants, rotflmfao!
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I can hear you now DMD, – but, but, but what about the Opium Wars, the Sassoons, Waterloo, it was them naughty credit merchants, its all their fault, it was them capitalists, they refused to adopt my downwardly mobile economic system and now they got everything, they took it all, they got my credit and I got nothing except my Youtube videos, now all I ever do is cry about the credit merchants, – waah!
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I guess subscribing to Marxist economics wasn’t such a great idea? Probably seemed cool at the time, right DMD?, but the end result is always a shitty life.
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Don’t forget, try Youtubing, – its $30 bucks a month. Lol!
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He, he… Herr Dr… I’m much impressed by your many diverse international investments and your volatility and vitality, But most impressive is your remarkable motility. Invest also in a few butt plugs for yourself and save the World from drowning.
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Just one spray, that’s all it took. One little spray of Truth. lol
But Downwardly Mobile Dave – China is boring. It was exciting twenty years when it was volatile. You know the mantra, volatility is vitality. But as I told you before, those days are over. The volatility ended in 2020. Its a boring divi-cow right now. The extreme vol is elsewhere.
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You know DMD, it’s because you wasted your life listening to those worthless Youtubers why you now belong to the downwardly mobile demographic and why your patently disgruntled with the fact.
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But all this actually confirms is that your understanding of upwardly mobile economics is 100% false. At the same time it equally confirms that your understanding of downwardly mobile economics is 100% correct.
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This why our two groups differ.
Its actually true what Bessant said about your demographic, your the under-achievers whose degeneration led them into socialism. Now I do understand that your downwardly mobile economic system ends up with the redistribution of your wealth, which ties in nicely with the CCP’s Marxist economic theories. So, I guess you’ve been a subscriber to Marxist economic theory your whole life, which is probably why your so pro-CCP despite current capital trends.
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Now I’m sure your mastery of the Downwardly Mobile School of Economics has put you in good stead and propelled you to the top of your game, so fair play to you, well done – total respect bro.
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But do correct me the I’m wrong, according to your own writings, the core principles of the Downwardly Mobile School of Economics is to secure conviction of where to invest (e.g. China) and then refuse to invest, right?
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So, okay, I think I’ve got that now – thanks. It’s actually a very interesting approach you’ve got there DMD, very boutique, I can now understand how you’ve reached the pinnacle of success in this particular system. I’d also presume that another core feature of your economic theory is to never own a brokerage account?
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Ever thought about becoming a Youtuber?, – like the others, you’ll probably make 30 bucks a month if your lucky?
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re: cotwu blurted “I’ve actually been holding mainland Chinese assets since April 2010, been through two major drawdowns, so certainly never boring.”
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Wow! So suddenly now China is “never boring”. He, he… Atta boy, that’s a really admirable, neat double somersault with a triple pike twist. Have another Dim Sum for yourself.
‘For any normal persons interested in their future China is the abject opposite of being boring and irrelevant.’
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But Downwardly Mobile Dave I’ve already asked you to provide details of your Chinese holdings, but you went very quiet for some reason? Lol!
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I’ve actually been holding mainland Chinese assets since April 2010, been through two major drawdowns, so certainly never boring. And it never made me downwardly mobile!
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Oh please Downwardly Mobile Dave, not another Google search, please not another Google search result. But yes, another Google search. Oh whoopee, and another video was the result! Whoopee!. [and no, I won’t be squandering my valuable time watching yet another nobody: I curate my time].
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So Downwardly Mobile Dave first says, – ‘for those who know what they’re doing,’ but since he never owned a single mainland Chinese asset, he now has to ask Youtube videos what they’re doing!, rotffl.
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But Downwardly Mobile Dave, this is precisely why you’ve spent your whole life being downwardly mobile, and why you spend your life watching worthless Youtube videos and whining about the credit merchants,
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I wouldn’t even consider wasting my time watching these videos. They are designed for downwardly mobile people like yourself. The reason I do not watch this garbage is very simple. These people do not drive capital. They do not move capital because they have no capital. The only people worth listening to are those with the power to drive capital. Those are the only people I listen to. And I listen very, very carefully to what these people say on a daily basis.
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People who listen to the people that actually drive capital and one will always know what’s going on and in market.
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And that’s why your downwardly mobile Dave, because you watch useless Youtube videos posted by nobody’s that do not drive capital.
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But not to worry, Dave, you’ve been mentioned at the G20, so maybe they’ll invite to next years summit to give everybody a talk on your Downwardly Mobile School of Economics?
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That’ll be a laugh!
For any normal persons interested in their future China is the abject opposite of being boring and irrelevant. Observe China’s most recent role and its impact on global economics and capital movement since the bombing of Iran and the global oil disruption.. (Then standby for even more productivity and output from the Scions of Coloxyl Economics. )
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[https://www.youtube.com/watch?v=1ZS5_txbOsc ]
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How ” China Just Triggered A New World Order ” (and bored our Western High Finance expert to tears as BRICS grows bigger than the G7).
Oh lookee! A whole herd of “underachieving” Bull Elephants recently got bored with China too. $1.4 TRILLION buys a lot of boredom, not to mention the already existing $TRILLIONS in China.
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“Why BlackRock, JP Morgan, Goldman Moved $1.4 Trillion to China During Trump’s Trade War”
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“$1.4 TRILLION quietly moved to China… and almost no one noticed.
Why did BlackRock, JP Morgan, and Goldman Sachs make this move during Trump’s trade war?”
“In this video, we break down the hidden financial shifts behind the US–China trade war and explain why the world’s biggest institutions quietly redirected $1.4 trillion toward China while headlines focused elsewhere. This isn’t speculation — it’s about capital flows, power shifts, and global strategy.”
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[ https://www.youtube.com/watch?v=xQyU1psNtog ]
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” 📌 What you’ll learn in this video:
Why BlackRock, JP Morgan, and Goldman Sachs increased exposure to China
How Trump’s trade war policies changed global investment behavior
The real reason Wall Street didn’t pull back — but moved in deeper
What this means for US markets, China’s economy, and global power
How smart money positions itself before the public narrative changes
This video connects the dots between geopolitics, money flows, trade wars, and long-term economic strategy — in simple language anyone can understand.”
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You think Wall Street might be betting each way on China long-term?
He, He… You gotta luv the power of Truth. Give a shill even a micro dose of it and it instantly triggers long term rental-free space in its head. The only down side is that it has an obvious, laxative side effect.
Ha,ha,ha,ha, rotffl and rotffl again, good old Downwardly Mobile Dave from the prestigious Downwardly Mobile School of Economics. Just as I knew, no actual experience whatsoever, absolutely zero. Just the useless yack of the downwardly mobile. So your a fart-maxi, – now that I believe, rotffl.
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I know, I know, you don’t follow serious economic conferences due to the mental handicap of your amply displayed economic illiteracy, but nonetheless, last week’s G20 Summit was absolutely incredible, where for the first time ever, Scott Bessant brought ‘you’ into the conversation. I’m sure you’ll agree that was really nice of him? Your now making headlines at the G20 Summit Downwardly Mobile Dave, – congratulations old man!
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Here you go Davidd2, [quote]. ‘And when you talk about socialism here in the U.S., when we look at the demographic of those voters, they are over-educated and under-earning. So, these are under-achievers who are jealous of those who want to go and work every day.’ [unquote]. (13:02).
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https://www.youtube.com/watch?v=RZYc57qiECw
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Obviously you’re not over-educated, I get that, but your clearly a lifelong sub-achiever and sub-earner of the downwardly mobile class. So hats off to Scotty for bringing your demographic to everyone’s attention.
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Attempting to exploit other peoples thoughts to bring relevance to your own irrelevance merely highlights the relevance of other peoples thoughts.
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re: “please specify, which asset have you chosen to allocate to maximalist status”
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Obviously your exalted jar farts and BS.
Poor old daviddd2, obviously still hurt by having his ignorance exposed. As another commentator correctly pointed out – your desperation for relevance is now bordering on urgent.
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‘Yes, a pivot from the well developed world to nascent BRICS, for those who know what they’re doing . . . ‘ (daviddd2).
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So, as you know what your doing Dave, that’s ‘Downwardly Mobile Dave,’ right? What year did you first invest in China?, how did you invest there?, was it direct or indirect?, what companies were you invested in? and how did it go?.
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Like the rest of us, I guess you’d rotated a portion of your Chinese stocks into Vietnamese stocks in around 2017?, that was a nice little earner, especially real estate and milk stocks. The relocation of Chinese companies was a nice little boost as well, – remember that Downwardly Mobile Dave?
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So, as ‘you know what your doing’ Downwardly Mobile Dave, then tell us your Chinese holdings – past, present and future. Taking into consideration that investment gains derive from correctly predicting the future, then please specify, which asset have you chosen to allocate to maximalist status and what percentage of your portfolio?
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re: “Everyone knows that large-caps have generally passed through their biggest growth phase so people buy for capital security and yield. If people want larger growth potential they go to the mid-caps.”
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Yes, a pivot from the well developed world to nascent BRICS, for those who know what they’re doing and who figured out that the CCP and Xi were not only permitted but actively FUNDED to become the Premier manufacturing, industrial engine room for well over more than half the World’s population.
Problem? Volcanoes, tsunamis, earthquakes…
There’s absolutely nothing unusual about a second world economy entering its development stage and producing strong returns. In fact its normal.
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Comparing developed first world economies to developing second world economies is no different to comparing large-cap companies to mid-cap companies. Everyone knows that large-caps have generally passed through their biggest growth phase so people buy for capital security and yield. If people want larger growth potential they go to the mid-caps.
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Indonesia’s consumer based economy is a very good sign, this is where China messed up. The Jakarta economists probably took heed and organised a more balanced economy. Well done.
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Something to put on your watchlist.