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Presidential election in Indonesia: The economic impact on Europe

Market Insights | February 16, 2024

The 10-year presidency of Indonesian head of state Joko Widodo “Jokowi” ended with the new presidential election on February 14, 2024.

Around 205 million people had the chance to participate on polling day. The candidates were the current Defence Minister Prabowo Subianto, the Governor of Central Java Ganjar Pranovo, and Anies Baswedan, the former Governor of Jakarta.

The pre-election polls already showed a clear trend: former General Subianto appears to considerably resonate especially among younger voters, who make up around 50% of the electorate. This appears to be attributable to his contemporary social media campaign. Through his channels on Instagram, TikTok and Co., the 72-year-old successfully built up parasocial relationships, particularly among 17-39-year-old voters.

The impact of the presidential election on the European economy

Still, there is no clear answer to the question of what will happen politically after the elections, particularly when it comes to Indonesia’s relationship to Europe. However, the campaign promises already gave an indication of certain tendencies. Both Subianto and Central Java Governor Ganjar Pranowo announced to continue Jokowi’s work and prioritize policies focused on economic growth and development.

This will also be of interest to European trading partners. Currently Germany poses as Indonesia’s strongest European trading partner with around 400 investors. Despite the rather neutral, mediating role that Indonesia has taken up until now, the economic situation between Indonesia and the EU may take some hits.

Export bans and conditions

One reason for this is the in 2020 imposed export ban on nickel-ore, which is particularly important in the automotive industry. Another reason are the European palm oil requirements, which are driving a wedge between trade relations. In this context Subianto has already stated that Europe’s significance for the Indonesian market is rapidly declining.

Indonesia is currently the largest Southeast Asian economy and is forecasted to become one of the world’s top five economies by 2045, overtaking Germany.

The official election results are scheduled to be announced towards the end of march.

Melchers in Indonesia

With a population of round about 270 million people and a growing economy, Indonesia ought not be underestimated as a market power. Since 1981 Melchers “Melindo” is represented with two offices in Indonesia. One in Jakarta and one in Surabaya. Therefore, we can provide our customers with the full expanse of our services – from import and export to sales and marketing, as well as logistics, procurement and IT.

Are you interested in expanding to Indonesia? Here you can find more information about our offered services in Indonesia.

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