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Indonesia's financial sector needs more depth: World Bank
The World Bank has noted a lack of depth in Indonesia’s financial ecosystem when compared with developing neighboring countries, as domestic financial sector assets account for only 77 percent of GDP.
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Vendors wait for customers at a traditional market in Tangerang, Banten, on April 3, 2022. (AFP/Adek Berry)
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conomists at the World Bank have recommended that Indonesia’s government work on deepening the financial sector to accelerate the country’s economic recovery from the COVID-19 pandemic.
That recovery has been slowed down by skyrocketing global commodity prices and rising benchmark interest rates in many countries.
In a virtual press briefing on Wednesday, the Washington, DC-based institution noted the lack of depth in Indonesia’s financial ecosystem in comparison with neighboring developing countries, as domestic financial sector assets account for only 77 percent of GDP.
In the Philippines and Thailand, that number stood at 121 percent and 259 percent, respectively, while it was 284 percent in Malaysia.
The World Bank stated that the relatively low value of assets would hamper Indonesia’s ability to effectively finance its growth and transition to sustainable development.
“In a modern economy, the financial sector is considered to be the backbone of expanding economic activity. If not addressed [properly], it will drag down economic growth,” World Bank Indonesia and Timor-Leste country director Satu Kahkonen said in the briefing.
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