Indonesia Economic Snapshot

Real GDP growth will slow to 4.7% in 2023 and then reach 5.1% in 2024, once the impact of monetary tightening fades away and uncertainty about the 2024 elections abates. The economy has benefitted from strong commodity prices and will be sensitive to mounting global headwinds, including geopolitical tensions, slowing trade growth, and financial volatility. Low real wage increases and a soft labour market are holding back household consumption.

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The COVID-19 crisis has brought to the fore the vulnerability of the population to economic shocks, notably due to extensive informality, lagging skills and low social security coverage. Reforms in areas of skills, labour market regulation and barriers to entrepreneurship are hence top priority for a more resilient and equitable growth.

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