Indonesia regains upper-middle income rank on growth rebound
A strong post-pandemic rebound has pushed Indonesia back into the upper-middle income band of countries, according to the World Bank, putting it back on track to pursue its high-income status goal.
Indonesia reclaimed the rank this year as gross national income per capita climbed to $4,580, based on the bank’s latest classifications. It’s an improvement from the previous reading of $4,140, which had kept it in the lower-middle income status for the second straight year in 2022.
“Indonesia continued its strong post pandemic recovery and real GDP increased 5.3%,” the World Bank noted. The nation’s 2022 gross domestic product expanded at its fastest pace in nine years.
Southeast Asia’s largest economy first gained the upper-middle income status in 2020, only to be downgraded the following year as it suffered one of the world’s worst coronavirus outbreaks. The nation’s gradual reopening last year saw consumption and employment beginning to recover, while a global commodities boom allowed exports to act as an additional pillar of growth.
The latest rankings should bolster Indonesia’s ambition to become a high-income country by 2045, the centrepiece of outgoing President Joko Widodo’s economic platform. Jokowi, as the leader is known, had pushed for social aid, inflation control, and the resumption of public activities to reinvigorate the domestic economy post the pandemic.
Jokowi told a cabinet meeting on Monday steps are needed to sustain economic growth — by keeping food prices in check and boosting private consumptions. He also told his ministers to help maintain political stability ahead of elections in 2024.
“The second half will not be easy and we must be aware of several things, such as unstable global environment and geopolitical tensions that may impact our economy and trade activities,” Jokowi said during a cabinet meeting.
The government seeks higher GDP target for 2024 with an estimate range topping 5.7%. It also wants to reduce its poverty rate to 6.5%-7.5% from 9.57% in September, with extreme poverty completely eradicated by next year.