Chart of the Month - July 2026

When it comes to Australia’s exports it is hard to look past China, but Indonesia is the fourth most-populous country in the world (286 million people), with a fast-growing economy and middle class. Australian exports to Indonesia have increased markedly since the free-trade agreement between the two countries came into force in 2020 and are now over USD 7 billion (see chart below). If there is to be an Asian century, Indonesia (and other ASEAN countries) will be a big part of the story, and the Australian economy will benefit strongly as a result.

Indonesia’s growth

Over the last 10 years, Indonesia averaged 4.2% in real GDP growth. This was faster than the global average (3.1%) and the average for developing and emerging economies (4%). In 2019, Indonesia joined the ranks of upper-middle-income countries, which includes China.

Importantly for Australian exporters, Indonesia’s middle class was the fastest growing group within the country between 2002 and 2016. According to the World Bank the middle class grew by an average annual growth rate of 10%.

However, the impact of the COVID-19 pandemic has seen many people drop back into the aspiring middle class, as was the case in many other countries. According to official statistics, the middle class decreased by 16.6% between 2019 and 2024.

What happens next will depend on new President Prabowo Subianto and the impact of US tariffs on the global economy. Regardless, the potential is huge with the middle class comprising only 17% of the population compared to 37.5% in Thailand and 50% in China. 

Australia’s exports to Indonesia

As Indonesia’s economy and middle class have grown, Australia’s exports to Indonesia have also grown (see chart above). And since 2020, the free-trade agreement between the two countries has provided a boost.

Unsurprisingly, the composition of exports has changed over time. Back in 2003, the top five exports were largely raw materials. Fast forward to 2023 and Indonesian consumers are showing their strength: wheat was the top export with gold in third place (see chart below). This reflects rising incomes and changing preferences for wheat-based products over rice; a trend seen elsewhere in Asia. In 2023, Indonesia was the third-largest importer of wheat and meslin in the world.

Live cattle (bovine) continues to be an important export to Indonesia, a predominantly muslim country. Live cattle are used to help manage Indonesian herd sizes in response to short-term changes in demand. However, frozen beef exports have been growing faster than live cattle exports and overtook them in 2023 (see chart below). According to some commentators, underlying demand for beef is strong in Indonesia and exports would be higher still if not for Indonesian quotas. A growing middle class will see increased demand for beef over time.

Final thoughts

Trade at its best is complementary. Australia is an island continent blessed with minerals and agricultural resources. Indonesia is the world’s most populous archipelago on Australia’s doorstep. It is already a win-win relationship that should only strengthen over time as both countries continue to grow.