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View all search resultsPrabowo’s second year and the changing economic landscape
Prabowo’s populist, project-driven, fiscally expansionary approach has been unfolding in a fragile institutional setting.
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President Prabowo Subianto speaks on Sept. 23, during the General Debate of the United Nations General Assembly at the UN headquarters in New York City. (AFP/Timothy A. Clary)
T
he global economic landscape has been turbulent even before Prabowo Subianto was inaugurated as the eighth Indonesian president in October last year.
The world economy has been destabilized by geopolitical tension, deglobalization, pandemic scarring and climate change risk.
The rules-based world order has been partly ignored and dismantled, and the increase of trade weaponization has fractured the global supply chain, especially after United States President Donald Trump imposed unilateral sweeping tariffs on the US trade partners.
This is the world economic landscape that Prabowo has to deal with as his presidency enters the second year.
Domestically, a challenging landscape has unfolded, marked by shift in governance and policy making, persistent low tax revenue and surging government debt.
Employment conditions have worsened, evidenced by increasing layoffs, stagnant wages, decline in job quality and expansion of informal employment. This was the result of underinvestment after the pandemic where investment was at 29 percent of GDP, below 32 percent GDP before the pandemic.
Creating more jobs in manufacturing will face formidable challenges, as manufacturing is becoming more capital intensive. Between 2014 and 2019, every 1 percent growth in manufacturing GDP created 157,000 new jobs, compared with 45,500 jobs created over 2019 to 2024. And with the advent of automation, digital platforms and artificial intelligence, the space for creating more jobs is shrinking.
