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Indonesia was briefly an upper middle-income country. Then came the pandemic.
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Shoppers walk past a department store at Ambarukmo Plaza in Yogyakarta on Tuesday. (JP/R. Berto Wedhatama)
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ndonesia’s first annual economic contraction since the 1998 Asian financial crisis may have a long-term impact on the country, pushing back the government’s efforts to escape from the middle-income trap by 2045, a top government official has warned.
The country’s gross domestic product (GDP) shrank by 2.07 percent year-on-year (yoy) in 2020 as the COVID-19 pandemic suppressed social and economic activities, Statistics Indonesia (BPS) reported earlier this month.
As a result, the country’s GDP per capita – a universal measure of a country’s prosperity – fell by around 3.7 percent to Rp 56.9 million (US$3,911) in 2020 from Rp 59.1 million in the previous year, according to BPS.
“The long-term impact, if we keep going down like this or our economic growth rate stays only 5 percent, for example, is that it will be very hard to get out of the middle-income trap,” National Development Planning Minister Suharso Monoarfa said in a virtual briefing on Tuesday.
