In 2013, look for emerging markets to continue growing faster than the US, Europe and other leading economies. Among these, Indonesia is a standout.

The gross domestic product (GDP) of this nation of islands has grown some 6 percent annually since 2008. Once an oil-exporting country, Indonesia pulled out of OPEC in 2008 since it was consuming virtually all the oil it produced. Industry is now some 42 percent of the $1 trillion economy, including textile manufacturing, electronic assembly and mining.

Many don’t realize that Indonesia is the world’s fourth most populous country, behind China, India and the US. And its population of 240 million is relatively well off, with 60 percent of its people considered middle class. The poverty level is around 12 percent vs. 15 percent in the US.

Given the large middle class, consumer demand accounts for more than 60 percent of Indonesia’s GDP. And demand will get a boost this year: In November 2012, the capital province of Jakarta approved a 44 percent increase in the minimum wage. Several other provinces are considering similar measures, most of which are expected to pass.

Higher wages are likely to spur sales of big-ticket items such as cars, for which sales jumped by about 30 percent last year. And consumer purchases overall are on the rise, with unemployment at 6.6 percent and the average annual income having increased to around USD3,500.

More good news: Indonesia’s debt is down to only 30 percent of GDP. And in 2012, Indonesia’s debt rating was raised to investment grade by both Fitch and Moody’s.

Of course, the country has its problems, including widespread corruption and local insurgencies. But things seem to be getting better. In fact, Indonesia has become a magnet for foreign investment, which should continue to provide further upside for Indonesian stocks in 2013.

iShares MSCI Indonesia Investable Market Index (NYSE: EIDO) is an easy way to buy a stake in Indonesia’s prosperity. EIDO was launched in May 2010, and since then its portfolio has returned more than 12 percent annually.

We favor EIDO because it offers substantial exposure to the Indonesian consumer: Consumer goods companies are 33 percent of assets. Basic materials, which are vulnerable to global pricing, are 17 percent of assets.

At 25 percent of assets, EIDO’s allocation to financials may seem excessive for an emerging market. However, the five largest Indonesian banks are the bulk of this exposure; all have strong balance sheets and loan growth over the past few years. For the foreseeable future, they also face little competition in the domestic market.

EIDO, which makes semiannual distributions, currently yields 1.5 percent. The payout has been growing the past few years as Indonesian companies have returned more of their profits to shareholders, making the fund a great growth play with an income kicker.

But don’t go overboard: EIDO’s 0.59 percent expense ratio is relatively high; the fund is overly concentrated (nearly 60 percent of assets in the 10 largest holdings); and it does not hedge currency exposure. So use EIDO to spice up your foreign holdings, not as the main course.