The Indonesian economy is the largest in Southeast Asia and the 16th largest in the world, with annual gross domestic product (GDP) valued at approximately USD940.9 billion (2016). In 2014, the services sector was the most prominent employer in Indonesia, accounting for 45percent of local workers (compared to only a third in 1990). This was followed by the agriculture sector which employs 34percent of local workers (down from 56percent in 1990) and the industry sector (including manufacturing) which accounts for 21percent of local workers (having become more prominent in recent years).
Indonesia’s economy has significant points of difference with its Asian neighbours, such as Singapore and Thailand. In particular, Indonesia’s economy is largely driven by domestic activity rather than exports, which helped to cushion it from the global crisis of 2008-09.
Before the Asian economic crisis struck in 1997, Indonesia’s GDP ranked 22nd in the world at IDR624,337 billion - this equates to a per-capita annual income of approximately AUD705. The economy contracted in 1998, but resumed growing in 1999 on the back of increased government and consumer spending. Subsequent years of economic growth have elevated Indonesia into the top-20 world economies, earning it membership of the G20 group of nations.
After a significant setback prompted by the Asian economic crisis of the late 1990s, Indonesia’s economy has accelerated over the past 10 years, with GDP growth averaging more than 5.7 per cent a year. 2016 had a slightly lower growth rate of 4.9 per cent. This is due to a drop in private consumption, lower then expected Government spending and low commodity prices. Looking forward, annual average GDP growth is forecast at 5.7 per cent for the period 2017 to 2021, putting Indonesia on track to join the club of trillion dollar economies within just a few years.
Strong economic growth is helping the country achieve dramatic reductions in poverty. According to the World Bank, Indonesians living in poverty fell from 23.4 per cent of the population to 11.3 per cent between 1999 and 2014. This coincided with extensive growth in the number of Indonesians considered middle class – now approaching 50 million – and Indonesia’s increasing investment in basic services, particularly education.
Indonesia has a market-based economy in which the government plays a significant role, including administering prices for some basic goods such as fuel, rice and electricity.
In terms of value added, the industrial sector accounted for 40 per cent of GDP in 2015. Significant foreign direct investment and government incentives have positioned the industry for future growth. Major industrial sectors include petroleum and natural gas, textiles and apparel, mining, footwear, plywood, rubber and chemical fertilisers. The services sector is equally as important to Indonesia’s economy, accounting for 43 per cent of GDP in 2015. Agriculture on the other hand only accounted for 14 per cent.
Indonesia’s main trading partners are Japan, China, Singapore and South Korea. The United States is also a significant export market. Indonesia’s most important export commodities are oil and gas, minerals, crude palm oil, electrical appliances and rubber products.
The Indonesian economy possesses sound fundamentals of social stability, strong domestic demand for goods and services, steadily increasing foreign reserves (about $137.5 billion in June 2023), and stable prices with moderate-to-low inflation.
The country is a major exporter of crude petroleum and natural gas. In addition, Indonesia is one of the world's main suppliers of rubber, coffee, cocoa, and palm oil; it also produces a wide range of other commodities, such as sugar, tea, tobacco, copra, and spices (e.g., cloves).
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.”
What are the major economic issues in Indonesia? Indonesia's economy grapples with challenges like dependence on natural resource exports, infrastructure gaps, regional disparities, and a need for skilled labor. Corruption, complex regulations, environmental issues, and income inequality also impede growth.
General. Indonesia ranked 83 out of 169, Good Country Index 2022. Indonesia hosts 10 UNESCO's World Heritage Sites and holds 12 items UNESCO's Intangible Cultural Heritage. Freedom in the World: partly free (2021).
Indonesia's economic freedom score is 63.5, making its economy the 53rd freest in the 2024 Index of Economic Freedom. Its rating is unchanged from last year, and Indonesia is ranked 10th out of 39 countries in the Asia-Pacific region. The country's economic freedom score is higher than the world and regional averages.
The economy of Indonesia is a mixed economy with dirigiste characteristics, and it is one of the emerging market economies in the world and the largest in Southeast Asia. As an upper-middle income country and member of the G20, Indonesia is classified as a newly industrialized country.
Growth in Southeast Asia's largest economy was mostly driven by private consumption which remains strong against a cumulative 250 basis points of interest rate hikes by Bank Indonesia since August 2022.
Indonesia's most important trade partner is China, in terms of both exports and imports. Other important trade partners are the US, Japan, India, South Korea and fellow ASEAN members Singapore, Malaysia, the Philippines, Thailand, and Vietnam.
Indonesia is known for its diverse tourist attractions. The country has an endless list of wonderful tourist places, from beaches and volcanoes to temples and museums. You can visit Mount Rinjani, Kuta Beach, Campuhan Ridge Walk, Sanur Beach, Saraswati, Borobudur temples, and much more.
Indonesia has become increasingly globally integrated over the past half century, with its ratio of trade to GDP rising from 30 per cent in 1970 to 60 per cent in the 2000s. The value of Indonesia's exports rose rapidly in the early 1970s in line with the first oil price shock.
The economy of Indonesia is the world's 16th-largest by nominal GDP and the 7th-largest by PPP. It is the world's third-largest democracy, a regional power, and is considered a middle power in global affairs.
The Republic of Indonesia, the world's fourth most populous and largest Muslim-majority state, is undergoing a profound political transformation. Governmental instability, a fragile economy, secessionist movements, and ethnic and religious conflict threaten the country's nascent democracy. The stakes are high.
According to the latest HDI rankings, quality of life in Indonesia was ranked joint-116th in the world with a score of 0.694 out of a possible 1. This ranking and score also meant that Indonesia was ranked as a country with medium human development.
Consumer price inflation in Indonesia averaged 4.1% in the ten years to 2022, above the Asia-Pacific regional average of 2.1%. The inflation rate for 2022 was 4.2%.
As of my last knowledge update in January 2023, Indonesia is considered to be a middle-income country with a diverse economy. The country is rich in natural resources, has a large and growing population, and is one of the world's emerging economies.
However, based on the rapid development of modernization and globalization, countries that were used to be considered as Third World countries achieve big economic growth, such as Brazil, India, and Indonesia, which are no longer considered poor nations in the 21st century.
Indonesia, being the easiest destination for expats to find housing, ranks 6th on the index. The country offers great saving opportunities with low living expenses, while the language is also easy to learn. However, dealing with local bureaucracy can be a bit difficult in Indonesia.
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