Jakarta – Indonesia may soon rejoin the upper-middle income country again after continuing a robust recovery from the Covid-19 slump in the fourth quarter of 2021, a senior government official said on Monday.
The largest economy in Southeast Asia expanded 5.02 percent in the three months compared to the same period last year, thanks to returning consumers' appetite to spend and high prices in the global market for the county's top export commodities like palm oil and coal, data from the Central Statistics Agency showed on Monday. Overall, the economy grew 3.69 percent in 2021, bouncing back from a 2.1 percent slump in 2020.
That recovery was enough to boost Indonesia's gross domestic product (GDP) per capita to Rp 62.2 million ($4,349.5) last year, increasing 8.1 percent from Rp 57.3 million in 2020.
Febrio Kacaribu, the head of Fiscal Policy Agency (BKF) at the Ministry of Finance, the country was expecting to reclaim upper-middle-income it first obtained in 2020. But, as the Covid-19 pandemic pressured the economy, World Bank reclassified Indonesia as a lower-middle income country last year.
According to the World Bank's latest countries classification in 2021, an upper-middle income country has a gross national income (GNI) per capita of between $4,096 and $12,695. GNI differs from GDP as the former covers the value of all products and services generated by citizens, regardless of whether they are produced in the country or not. GDP only accounts for goods and services produced within the country.
"The success of controlling the pandemic, public participation in implementing health protocols and vaccinations, the effectiveness of fiscal stimulus policies by the government and good synergy between authorities in maintaining stability and accelerating economic recovery are the main factors in maintaining the sustainability of the national economic recovery," said Febrio in a statement on Monday.
The government is also optimistic that the economic performance will be more robust and is projected to grow by 5.2 percent in 2022. According to Febrio, this performance will be supported by strengthening investment and exports and the continued recovery in public consumption.
He said comprehensive pandemic control efforts, including massive acceleration of vaccination and consistent implementation of structural reforms, would also help support the recovery.
The World Bank will update the country classification on July 1, 2022. It groups the world's economies into low, lower-middle, upper-middle, and high-income countries, based on the GNI per capita in the current US dollar of the previous year.