Indonesia has made a significant contribution to the world economy. It is the largest economy in the region and a member of the G20 group of the world’s wealthiest nations. Manufacturing accounts for the majority of the country’s GDP.
What accounts for Indonesia’s low GDP per capita?
Second, and this is a fundamental flaw in the Indonesian economy, the country’s export and import performance accounts for only a small percentage of the total GDP. Indonesia’s trade-to-GDP ratio is around 40%, which is significantly lower than the global average of 55-60%. Indonesia is inadequately connected into global supply and value chains, as seen by its low ratio. It’s a condition that means lost opportunities for foreign investment (losing out on new technology and knowledge that foreign investors typically bring), new job prospects, and – more broadly – wasted opportunities for economic and social advancement.
The only ‘benefit’ of a low trade-to-GDP ratio is that the country is less vulnerable to a rapid reduction in international trade, as was the case in 2008-2009 (global financial crisis) and 2018-2020. (in the context of – first – the United States-China tariff war and – second – the COVID-19 crisis). However, this means that when trade conditions are favorable, Indonesia gets left behind (mainly relying on unprocessed commodities).
As a result of Indonesia’s large domestic market (the country has a population of around 270 million people) and relative ‘immunity’ to sudden drops in global trade (as well as drops in foreign investment inflows, as foreign investment as a percentage of GDP is typically low in Indonesia), the country will not experience significant contractions during times of global crises. Singapore, which is heavily reliant on international trade and investment, saw a decline.
What accounts for Indonesia’s high GDP?
Since the introduction of an inflation target in 2000, the GDP deflator and the CPI have grown at an average annual rate of 103/4 percent and 9%, respectively, which is similar to the pace seen in the two decades preceding the 1997 crisis but well below that seen in the 1960s and 1970s. Throughout the 2000s, inflation has generally trended lower, with some of the variations reflecting government policy measures such as reductions in fiscal subsidies in 2005 and 2008, which resulted in huge transitory spikes in CPI rise.
Due to rising worldwide oil prices and imports, Indonesia experienced a “mini-crisis” in late 2004. Before stabilizing, the currency exchange rate reached Rp 12,000/USD1. The government was compelled to withdraw hefty fuel subsidies under President Susilo Bambang Yudhoyono (SBY), which were set to cost $14 billion in October 2005. Consumer fuel prices more than doubled as a result, resulting in double-digit inflation. The situation had stabilized, but the economy was still struggling, with inflation hovering about 17% in late 2005. As the decade of the 2000s advanced, the economic outlook improved. In 2004, growth climbed to 5.1 percent, then 5.6 percent in 2005. In 19961997, real per capita income surpassed fiscal levels. Domestic consumption, which accounts for nearly three-quarters of Indonesia’s gross domestic product, was the primary driver of growth (GDP). In 2004, the Jakarta Stock Exchange was Asia’s best-performing market, rising 42 percent. Low levels of foreign investment, bureaucratic red tape, and rampant corruption, which costs Rp. 51.4 trillion (US$5.6 billion) yearly, or around 1.4 percent of GDP, continue to stymie growth. However, thanks to the peaceful completion of the 2004 elections, there is a strong economic confidence.
Is Indonesia a wealthier country than India?
India’s nominal gross domestic product (GDP) is $2.6 trillion, much larger than Indonesia’s ($1.01 trillion). It is significantly more populous than Indonesia, and among Asian countries, it was a late bloomer on economic reforms.
What are Indonesia’s GDP and GNP?
- In December 2021, Indonesia’s Gross National Product (GNP) was estimated to be 307.046 USD billion.
- This is up from the previous figure of 292.201 USD billion in September 2021.
- Indonesian Gross National Product (GNP) data is updated quarterly, with 116 observations from Mar 1993 to Dec 2021, averaging 104.820 USD bn.
- The statistics ranged from a high of 307.046 USD bn in December 2021 to a low of 20.155 USD bn in September 1998.
- The data on Indonesia’s Gross National Product (GNP) is still active in CEIC and is published by CEIC Data.
- The CEIC converts quarterly GNP into US dollars. Based on SNA 2008, the Central Bureau of Statistics publishes Gross National Product in local currency. Currency conversions are done using the Bank of Indonesia’s average market exchange rate. Previous to Q1 2010, Gross National Product was calculated using SNA 1993, and prior to Q1 2000, it was calculated using SNA 1968.
Is Indonesia a wealthier country than Australia?
Economic Indicators Comparison: Australia vs. Indonesia At a GDP of $1.4 trillion, Australia is the world’s 13th largest economy, while Indonesia is 16th with $1 trillion. Australia and Indonesia were placed 111th and 31st, respectively, in terms of GDP 5-year average growth and GDP per capita.
Is Indonesia’s economy in trouble?
Since emerging from the Asian financial crisis in the late 1990s, Indonesia a diverse archipelago nation with more than 300 ethnic groups has experienced exceptional economic development.
Indonesia is now the world’s fourth most populated country, with the tenth largest economy by purchasing power parity and a G-20 member. Furthermore, Indonesia has made great progress in reducing poverty, with the poverty rate falling from more than half in 1999 to slightly under 10% in 2020.
Indonesia’s economic planning is based on a 20-year development strategy that spans 2005 to 2025. It is divided into RPJMN (Rencana Pembangunan Jangka Menengah Nasional) 5-year medium-term development plans, each with various development priorities. The present medium-term development plan is the final stage of the long-term development strategy. Its goal is to boost Indonesia’s economy through increasing the country’s human capital and global competitiveness.
Indonesia, on the other hand, still has a long way to go in terms of development. Furthermore, the worldwide crisis brought on by the COVID-19 pandemic has posed unprecedented challenges to Indonesia’s development objectives. As a result of the epidemic, Indonesia’s economy fell from upper-middle to lower-middle income category by July 2021. The pandemic also hampered Indonesia’s progress in lowering its poverty rate, which rose from 9.2 percent in September 2019 to 10.4 percent in March 2021, a new low.
In response to an increase in COVID-19 cases from June to July 2021, the government boosted the COVID-19 fiscal package from 4.2 to 4.5 percent of the country’s GDP through budget reallocations from March 2020 to July 2021. The extra funds will be used to improve medical care as well as expand food aid, cash transfers, and wage subsidies.
Why is Tajikistan so impoverished?
Tajikistan is located in Central Asia, between Afghanistan, China, Kyrgyzstan, and Uzbekistan, and is surrounded by a vast mountain range. Major oil and natural gas deposits have been discovered in Tajikistan in the last decade, rekindling hopes of reviving the country’s ailing economy and returning economic power to the Tajiks. Tajikistan had roughly 27.4 percent of its population living below the national poverty threshold as of 2018. The following are ten statistics about poverty in Tajikistan:
facts about poverty in Tajikistan
- Not all parts of the country are affected by poverty in the same way. In 2018, the poverty rate in Sugd’s northwest region was 17.5 percent. The Districts of Republican Subordination, just below, had a percentage of almost double that, at 33.2 percent.
- Poverty appears to be more acute in rural Tajikistan than in metropolitan areas. Cotton farming, one of Tajikistan’s principal cash crops, has been demonstrated to do little to reduce poverty levels or lift people out of poverty. Those with non-agricultural occupations in metropolitan regions like as Dushanbe, the capital, might move to Russia to find work. This happens frequently. In 2018, the poverty rate in urban Tajikistan was at 21.5 percent, while rural Tajikistan had a rate of 30.2 percent.
- In Tajikistan, the rate of poverty alleviation has slowed. Poverty rates fell from 83 percent to 31 percent between 2000 and 2015. Since 2014, the annual decrease in the national poverty rate has slowed to 1%.
- The lack of job creation and stagnant pay growth are to blame for the declining rate of poverty alleviation. Due to a lack of new and better opportunities to stimulate the economy, a large portion of the workforce seeks work in Russia, which does little to help Tajikistan’s economy.
- According to reports, 75% of households are concerned about covering their family’s basic needs in the coming year. Tajikistan is the poorest and most remote of the former Soviet Union’s sovereign states. More than 95 percent of households failed to meet the minimal level of food consumption to be considered appropriately sustained, according to the first nationally conducted study since the war ended and Tajikistan attained independence.
- Tajikistan has a high rate of stunting and malnutrition among children, which has been linked to insufficient access to clean water and food. Many families spend more money on drinking water than they can afford. For the 64 percent of Tajiks who live below the national poverty line, this means suffering additional costs on top of a daily income of less than $2.
- There are just 163 places to dwell for every 1000 people. With 1.23 million dwelling units, Tajikistan has the smallest housing stock in Europe and Central Asia. This is largely due to the government’s inability to offer public housing, while private owners lack the financial means to invest in or maintain their houses.
- Tajikistan’s population is 35 percent under the age of 15. This percentage is around 17% among the world’s wealthiest countries. A large number of young people in the population means more difficulties for the rising workforce as they try to make ends meet, especially in a place where the economy may not be able to respond. This might exacerbate Tajikistan’s economic stagnation, with disgruntled young workers fleeing to other countries, as many are already doing.
- It’s possible that up to 40% of Tajiks in Russia are working illegally. Tajikistan is reliant on Russian remittances. This is in addition to Russia’s increasingly stringent administrative procedures for foreign workers. Because of these two factors, the Russian Ministry of Internal Affairs’ estimate of one million Tajiks working in Russia per year is suspect. In Tajikistan, between 30 and 40 percent of households have at least one family member working overseas.
- As of 2015, Tajikistan had a literacy rate of 99.8%. Primary education is compulsory, and literacy is strong, albeit young people’s skill levels are declining. This is due to economic needs driving young people away from their education in pursuit of a source of income to help them meet their basic necessities.
Since attaining independence in 1991, Tajikistan has been working its way out of poverty. The country’s over-reliance on remittances, on the other hand, has caused its economy to stagnate. As a result, there is a hungry workforce and a scarcity of jobs to feed them. Gurdofarid is a non-profit organization that aims to empower Tajik women by teaching them the skills they need to find work in their own nation.