Research Briefing | Feb 23, 2022

Capital move not likely to threaten Jakarta’s economic importance

The Indonesian government has ambitions to move the country’s capital away from Jakarta to an as-yet unbuilt city over 1,000km away on the island of Borneo. The construction of the new city, to be named ‘Nusantara’, is planned to start in 2022 with government operations and personnel beginning to relocate from 2024. Should the move go ahead, we think it is unlikely to be a significant economic threat to Jakarta.

What you will learn:

  • The main motivations for the move are to ease the urban and environmental pressures on Jakarta.
  • Should the move go ahead, we think it is unlikely to be a significant economic threat to Jakarta.
  • Land subsidence, however, is a more substantial threat to Jakarta with the possibility in the coming decades of large swathes of the city coming under water, displacing people and businesses. In our baseline forecasts, enough preventative measures are introduced to avoid this and we project Jakarta’s economy to grow on average by 5.1% a year, 2022-2040.
Back to Resource Hub

Related resources

Construction UK

Post

UK Construction prices and debt push up CRE costs

UK commercial real estate costs will increase more sharply than inflation this year, resulting in the widest margin since records began in 2013, according to our new CRE Cost Monitor. Our model suggests CRE costs will peak at 11.3% y/y in mid-2022, against a CPI of 8.6%, a margin of more than 2.5ppts. Costs will then fall back to 8.8% by end 2022, 2.2ppts above our inflation forecast.

Find Out More
House in front of stunning sunset

Post

The dynamics behind deteriorating housing affordability in North America

Housing affordability worsened in Q4 2021 at the national level in both the US and Canada, according to our updated Housing Affordability Indices (HAIs), as income gains failed to offset the impact of higher home prices and interest rates.

Find Out More