Favourable commodity prices and still buoyant capital inflows are helping Indonesia to resist strong global headwinds. However, domestic demand and private consumption growth is being held back by high headline inflation. With foreign investors recognizing the progress made towards macroeconomic stability and enhanced structural reforms, and expanding their reach in Indonesia, GDP growth is projected to average around 5% in 2022 and 2023 and strengthen slightly in 2024.
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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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