Indonesia has a very good record of poverty reduction, having halved its incidence over the past two decades. Nevertheless, almost 30 million people still live below the national poverty line, mostly in rural areas and in certain provinces.
In Indonesia, the pressure on the environment that natural resource exploitation is creating should be addressed by increasing the share of gas and renewables in the energy mix, properly defining property rights and regulations regarding forest land, and implementing a positive implicit carbon price. More resources should be devoted to combating widespread illegal mining and deforestation.
The Indonesian economy has enjoyed strong and stable growth over the past decade and a half, leading to impressive reductions in poverty and major improvements in living standards. But challenges remain to continue to converge towards higher-income countries, according to the latest OECD Economic Survey of Indonesia.
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This country note from Going for Growth 2015 for Indonesia identifies and assesses progress made on key reforms to boost long-term growth, improve competitiveness and productivity and create jobs.
Angel Gurría, Secretary-General of the OECD congratulated the newly elected President of Indonesia, Joko Widodo, for taking a bold first step in his economic reform agenda by substantially cutting fuel subsidies.
While the outlook for many OECD countries remains subdued, Emerging Asia is set for healthy growth over the medium term. Annual GDP growth for the ASEAN -10, China and India is forecast to average 6.5% over 2015-19. Growth momentum remains robust in the 10 ASEAN countries, with economic growth averaging 5.6% over 2015-19.
Indonesia needs to address a wide range of structural bottlenecks in order to sustain strong medium-term growth.
Indonesia demonstrated good resilience during the financial and economic crisis. As it strives to become one of the 10 largest economies in the world by 2025, its productivity growth must be enhanced through a wide range of structural reforms to address infrastructure bottlenecks, widespread informality, shortages of skilled labour and high barriers to competition.
Source: OECD Main Economic Indicators (updated continuously) - Composite leading indicators (CLIs) are calculated for 29 OECD countries (Iceland is not included), 6 non-member economies and 9 zone aggregates. A country CLI comprises a set of component series selected from a wide range of key short-term economic indicators mainly covered in the MEI database.