Indonesia has demonstrated its economic strength with impressive growth since overcoming the Asian financial crisis within the late Nineties and the pandemic crisis. The World Bank recognizes Indonesia as one in all the world’s fastest-growing economies, with economic growth exceeding 5 percent for six consecutive quarters.
Finance Minister Sri Mulyani Indrawati said this achievement makes Indonesia one in all the strongest and most sustainable economic growth countries on the earth. While the challenges facing the worldwide economy vary, many countries will experience a major downturn in 2023 as a result of global instability. Geopolitical escalation and debt problems in each emerging and developed economies are hampering economic recovery.
However, Indonesia continues to grow strongly amid a world economic slowdown. Domestic economic performance remained stable, with manageable inflation and powerful purchasing power. Inflation in Indonesia reached 4.0% (y/y) in May 2023, which is a positive result in comparison with developed countries similar to Italy, Australia, Germany and Singapore.
The Indonesian government is committed to keeping inflation at around 3% ± 1% in 2023 to speed up the country’s economic recovery. There is political cooperation and coordination to keep up macroeconomic stability and speed up economic recovery.
Indonesia’s achievements can be seen in its strengthening trade sector. Exports and imports have increased, and the trade balance is in surplus. In May 2023, the export value reached USD 21.72 billion, a rise of 0.96%. (y/y), while the worth of imports reached USD 21.28 billion, which implies a rise of 14.35%. (y/y). Thus, in May 2023, Indonesia’s trade balance recorded a surplus of USD 0.44 billion.
Additionally, the post-pandemic recovery has elevated Indonesia to the upper-middle-income group of nations in 2022, after being among the many lower-middle-income countries for 2 years in a row in 2022. This increase in gross national income (GNI) per capita to $4,580 strengthened Indonesia’s position.
This is consistent with Indonesia’s ambition to develop into a high-income country by 2045, which is at the middle of President Joko Widodo’s economic agenda. By taking steps similar to maintaining economic growth, political stability and reducing poverty rates, Indonesia is moving towards a more prosperous and equitable future.
According to the World Bank, Indonesia continued its strong recovery from the pandemic, with real gross domestic product (GDP) growing by 5.3%. This was the fastest economic growth in nine years.
Indonesia, Southeast Asia’s largest economy, achieved upper-middle-income status for the primary time in 2020, but fell the next 12 months as a result of a serious coronavirus epidemic.
However, with the gradual reopening last 12 months, consumption and employment began to recuperate, and a surge in global commodity prices strengthened the export sector as a further pillar of growth.
The government is targeting higher GDP growth in 2024, estimated at above 5.7%. The government also pledged to scale back the poverty rate to six.5-7.5% from 9.57% in September, with the goal of completely eradicating extreme poverty by next 12 months.
Indonesia’s success in maintaining strong economic growth amid global uncertainty is the results of consistent government policies and efforts to strengthen economic fundamentals. To meet future challenges, Indonesia must proceed to strengthen cooperation and innovation to construct a stronger and more sustainable economy.
Source:Bloomberg | Indonesian Ministry of Finance
