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Indonesia Economic Snapshot

 

Economic Forecast Summary

Upcoming July: 2019 Structural Reform Priorities

Economic Survey of Indonesia

Indonesia is Southeast Asia's largest economy, rich in all types of natural resources as well as cultural diversity. A young and dynamic democracy, it is urbanising and modernising rapidly. In contrast with most OECD countries and many emerging economies, around half of the population is under 30 years old, and the working-age population ratio is set to rise during the next decade (United Nations, 2017).

Two decades after the 1998 Asian Financial Crisis, and one decade after the Global Financial Crisis, Indonesians’ living standards are far higher than before, and their economy is more resilient. GDP per capita has risen by 70% during the past two decades. The end of the commodity price boom weighed on incomes and government revenues, yet GDP growth has remained around 5%, and per capita income has increased by almost 4% annually. Poverty rates have fallen in both rural and urban areas (Figure 2, Panel A). Distribution has also improved of late: the Gini coefficient on consumption has been declining since 2015. Confidence in the national government is higher than in any OECD country (Panel B). Prudent macroeconomic policies and progress in structural reforms have been recognised by credit rating agencies, and Indonesia has climbed up international rankings of competitiveness and the business environment. Since 2015 Indonesia has leapt 34 places in the World Bank’s Ease of Doing Business ranking to 72nd.

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