The government sets its sights on maintaining stable inflation between 1.5% and 3.5% this year to drive economic growth above 5%, with aspirations to even reach 6% by 2029. Forecasts predict the average income of Indonesians could soar to Rp 99.83 million annually with that level of economy.
Officials assure the continuous monitoring of these macroeconomic indicators to stimulate the rise in average citizen income or gross domestic product (GDP) per capita, aiming to surpass US$ 5,000 by 2025.
“If we manage these aspects well, it could hopefully lead to an overall improvement in our welfare,” stated Ferry Irawan, Deputy Minister of Macro and Financial Economy at the Coordinating Ministry for Economic Affairs, during the National Movement for Controlling Food Inflation (GNPIP) event on Wednesday (3/27/2024), as reported by CNBC Indonesia.
Ferry highlighted that maintaining inflation within the targeted range could propel economic growth to 5.2% this year. Subsequently, growth is projected to escalate to 5.3% to 5.6% next year (2025) and sustain at 5.6% to 6.1% according to the 2025-2029 National Medium-Term Development Plan (RPJMN).
With an accelerated economic growth rate and controlled price levels due to maintained inflation targets of 2.5% plus or minus 1%, Ferry anticipated that GDP per capita in 2024 would elevate to US$ 5,509 or approximately Rp 87.12 million annually (Rp 7.26 million per month).
This signifies an upsurge from Indonesia’s total GDP per capita in 2023, as per the Central Statistics Agency (BPS), which stood at only US$ 4,919.7 or Rp 75 million annually (Rp 6.25 million monthly). Last year, Indonesia’s economic growth was a modest 5.05%.
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“With economic growth between 5.3%-5.6%, we hope to see a rise to US$ 6,300 (Rp 99.83 million/year or Rp 8.3 million) per capita by 2026. We anticipate that with robust growth and price stability, this will lead to increased per capita income,” Ferry emphasized.
Previously, Senior Economist and former Finance Minister Chatib Basri stressed the imperative for the president-elect in the 2024 elections, who will succeed President Joko Widodo, to pursue an economic growth target of 6%-7%. Failure to achieve this could impede Indonesia’s transition to a high-income nation.
Chatib underscored that attaining economic growth of 6-7% is vital to escape the middle-income trap. He suggested that achieving this growth target necessitates bolstering investment contributions to Indonesia’s Gross Domestic Product.
“They must devise strategies to achieve this,” Chatib asserted.
He cautioned that if Indonesia’s economic growth remains stagnant at 5% annually, the nation risks being ensnared in the middle-income trap. Chatib further warned that Indonesia could experience a demographic shift by 2050, potentially aging before achieving prosperity of economy.
