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Indonesia falls back into lower-middle-income ranks
Indonesia has fallen back into the World Bank’s lower-middle-income country classification after just a short stint in the upper-middle-income group in what the government has called an inevitable result of the COVID-19 crisis.
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A batik seller speaks to a customer at a traditional market in Yogyakarta in September 2011. Indonesia has fallen back into the World Bank’s classification for lower-middle-income countries, the international lender said in July 2021.
(World Bank/Nugroho Nurdikiawan Sunjoyo)
I
ndonesia has fallen back into the World Bank’s lower-middle income country classification after just a short stint in the upper-middle-income group.
The government expressed little surprise about the reclassification, given that the COVID-19 pandemic caused the country's first recession in more than two decades.
The World Bank reported on July 1 that Indonesia’s gross national income (GNI) per capita was estimated at US$3,870, 5.52 percent below the new threshold for upper-middle-income countries. The GNI was down 4.44 percent from a year earlier.
“The pandemic led to negative economic growth across almost all countries, including Indonesia, in 2020,” the Finance Ministry’s Fiscal Policy Agency head, Febrio Kacaribu, was quoted in a press release as saying on Thursday. “The decline in Indonesia’s per-capita income is an inevitable consequence.”
The World Bank’s announcement marks an end to Indonesia’s one-year period as an upper-middle-income country, raising questions about the government’s plan to escape from the so-called middle-income trap.
Read also: Indonesia was briefly an upper middle-income country. Then came the pandemic.
