Indonesia Should Become an Upper Middle-Income Country This Year, How Can It Be Achieved?

Monas Monument, DKI Jakarta

The Indonesian Ministry of Finance (Kemenkeu) has evaluated that the country should already be classified as an upper middle-income nation with a gross national income (GNI) per capita ranging from US$4,046 to US$12,535 this year.

The Head of the Fiscal Policy Agency (BKF) of the MoF, Febrio Nathan Kacaribu, stated that the government needs to maintain short-term economic stability by focusing on inflation and sustaining economic growth.

He emphasized the importance of both consumption and exports, which were strong last year, and the need to maintain the achievements made despite the challenges faced in 2023.

“We want to get out of the middle-income trap, and our gross domestic product (GDP) is already around US$4,700-US$4,800. If we exit the World Bank’s classification, maybe in the context of GNI, it’s around US$4,300. We should already be in the upper middle-income category this year,” Febrio said in the virtual BNI Emerald Market Outlook on Thursday (9/3).

Febrio affirmed that Indonesia had previously been classified as an upper-middle-income country according to the World Bank’s classification, before the COVID-19 pandemic.

However, after the pandemic, Indonesia fell back into the lower-middle-income category.

The World Bank classifies countries into four categories based on GNI per capita: low-income (US$1,035), lower-middle-income (US$1,036-US$4,045), upper-middle-income (US$4,046-US$12,535), and high income (more than US$12,535).

On the other hand, Febrio emphasized that the government’s short-term goal is to reduce unemployment and poverty rates. He even set a target for these issues to be resolved within the next year.

“We know that we need to continue transforming our economy, and we need to push structural policies. Although we are focusing on short-term goals, such as inflation, economic growth, unemployment rate, and even the extreme poverty rate of 0% next year,” Febrio concluded.