Wahyu Dwi Anggoro
Although Indonesia’s economy is larger today than at any time before, like many other countries it has yet to fully recover to its pre-pandemic trajectory. This reflects scarring effects from the pandemic, including in labor markets and productivity growth.
The overall economic outlook is subject to downside risks, primarily ones that could emanate from outside Indonesia: higher-for-longer interest rates in major economies could weigh on global demand, raise borrowing costs, and make it harder to borrow on world markets. Global geopolitical uncertainty could disrupt value chains.
“Indonesia has a track record of navigating shocks and maintaining economic stability,” said World Bank Country Director for Indonesia and Timor-Leste Satu Kahkonen in a media release on Wednesday (13/12/2023).
“The challenge for the country is to build on strong economic fundamentals to deliver faster, greener, and more inclusive economic growth. To achieve such growth, it is important to continue implementing reforms that remove bottlenecks that limit efficiency, competitiveness, and productivity growth. Doing so will enable Indonesia to accelerate growth, create more and better jobs, and achieve its vision of becoming a high-income country by 2045," he added.
A special section of the report offers suggestions for how Indonesia can speed economic growth and strengthen resilience while slowing greenhouse gas emissions. Indonesia’s transition to a low-carbon and climate-resilient economy could, in fact, generate a new phase of economic growth and poverty reduction.
