Indonesia Officially Upgrades to Upper-Middle-Income Country Status

Sudirman Central Business District or SCBD, South Jakarta, Indonesia

The World Bank has recently made a momentous decision by officially categorizing Indonesia as an upper-middle-income country, based on the latest Gross National Income (GNI) per capita classification. This significant development places Indonesia in a favorable position in the global economic landscape, signifying a positive trajectory in its economic growth and financial standing.

The World Bank’s classification of economies encompasses four distinct groups, namely low income, lower-middle income, upper-middle income, and high income. These classifications are reviewed and updated annually on July 1st, taking into account the GNI per capita of each country.

By evaluating the GNI per capita from the previous year, the World Bank has conclusively determined that Indonesia has risen to the status of an upper-middle-income country, affirming its progress in economic prosperity and development.

According to the World Bank’s official statement, several countries, including El Salvador, Indonesia, the West Bank, and Gaza, were found to have GNIs that were in close proximity to the upper-middle-income threshold in the year 2021. Consequently, their economies experienced moderate GDP growth in 2022, leading to their inclusion in the upper-middle-income category.

Indonesia, specifically, has demonstrated robust economic recovery after enduring the challenges posed by the global pandemic. Notably, the country achieved an impressive real GDP growth rate of 5.3% in 2022, a testament to its resilience and determination in overcoming adversities.

As a result of this growth, Indonesia’s per capita income experienced a commendable increase, reaching US$4,580, a significant leap from the figure recorded in 2021, which stood at US$4,140. This substantial rise in per capita income reflects the improved living standards and economic well-being of the Indonesian population.

It is noteworthy to mention that Indonesia had previously achieved the status of an upper-middle-income country in 2019, marking a milestone in its economic journey. However, the outbreak of the Covid-19 pandemic precipitated a temporary setback, causing Indonesia to revert to the lower-middle-income classification for consecutive years. Nevertheless, the recent reclassification as an upper-middle-income country underscores Indonesia’s resilience and determination in rebounding from the pandemic’s adverse impacts.

Despite this remarkable achievement, Indonesia recognizes that there is still room for growth and development on its path to becoming a high-income country. To attain such a status, Indonesia’s average income per capita would need to reach the significant milestone of US$13,845. This ambitious goal sets the stage for further economic initiatives and reforms in the pursuit of long-term financial prosperity.

As of July 1, 2023, the World Bank’s income classifications stand as follows:

  1. Low-income countries, characterized by a GNI of US$1,135 and below. This represents an increase from the previous threshold of US$1,085.
  2. Lower-middle-income countries, encompassing a GNI range of US$1,146 to US$4,465. This threshold has also experienced an upward adjustment from the previous range of US$1,086 to US$4,255.
  3. Upper-middle-income countries, with a GNI range of US$4,466 to US$13,845. This classification reflects a revision from the earlier range of US$4,256 to US$13,205.
  4. High-income countries, characterized by a GNI of US$13,845 and above. This category has been modified from the previous threshold of US$13,205.

In conclusion, Indonesia’s elevation to an upper-middle-income country is a testament to its unwavering commitment to economic growth and development. The World Bank’s recognition of Indonesia’s progress serves as an affirmation of the nation’s resilience and potential to emerge as a significant player in the global economic arena. As Indonesia continues to implement strategic initiatives and policies, it is poised to further enhance its economic standing and improve the well-being of its citizens.