Emerging markets like India and Indonesia, with rapidly growing populations, are set to benefit as demographics play a key role in investment decisions, according to Fidelity International and BlackRock Investment Institute. These nations are attracting investors due to anticipated infrastructure booms that promise economic growth. India, now the world’s most populous nation, and Indonesia showcased ambitions to become economic powerhouses through recent elections. BlackRock highlights the positive link between working-age population growth and share-price valuations. At the same time, Fidelity sees the financial sector benefiting from increased credit needs. Mr. Ian Samson from Fidelity remarked, “India and Indonesia’s young labour forces offer demographic dividends that far outshine larger economies.”
This demographic advantage has fuelled optimism and stock market gains in both countries, with the Nifty 50 Index at record levels and the Jakarta Composite Index reaching an all-time high in March. Analysts stress the need for structural reforms to reduce regulatory red tape, enhance job market flexibility, and attract foreign investment. He noted, “Solid structural reforms in India and Indonesia will create sufficient jobs to benefit from the demographic dividend.” More progress is needed, as Indonesia’s President-elect, Mr. Prabowo Subianto, targets 8% annual GDP growth despite historical challenges. Investors are watching if Indian state governments will implement national-level reforms. Global funds have invested US$ 5.5 billion in Indian bonds due to index-inclusion prospects and a focus on infrastructure. In comparison, US$ 1.8 billion was withdrawn from Indonesian notes over fiscal health concerns.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.
