Indonesia has officially been promoted from a lower middle-class country or a developing country to a middle-income country. But Indonesia still has a long way to go before it can be considered a developed or high-income nation.
After falling to a growth lower-income country in 2020 due to the pandemic, Indonesia quickly recovered and was once again listed by the World Bank in July 2023 as a growth upper middle-income country.
It is well known that the global bank divides nations into four categories depending on their GNI per capita. Specifically, low income ($1,035), low medium ($1,036 to $4,045), upper middle ($4,046 to $12,535), and high income ($12,535 or above).
According to the World Bank, Indonesia’s transition to middle-income status was fueled by an increase in gross national income (GNI) per capita, which in 2022 reached US$4.580, or the equivalent of roughly Rp68.7 million. This represents an increase of 4.170 US dollars, or around IDR 62.55 million, or 9.8% from the prior year.
By registering economic growth of 5.3% in 2022, this improvement in standing demonstrates Indonesia’s progress in reviving the national economy following the epidemic. The efficiency with which the pandemic was managed, the implementation of the Covid-19 management program, the National Economic Recovery (PC-PEN), as well as economic transformation via downstream natural resources (SDA), all played significant roles in this increase.
Through the 2020 to 2022 PC-PEN program, several State Revenue and Expenditure Budget (APBN) instruments play a significant role in providing policy bearings during the pandemic crisis and quickening the pace of the national economic recovery.
On the other side, Indonesia’s external balance has been strengthened and export performance has increased as a result of the significant influence of natural resource downstream policies. One of the few nations in the world that has been able to bounce back fast and powerfully is Indonesia.
Despite moving up the class ladder, Indonesia’s GNI per capita fell to fifth place in Southeast Asia in 2022. Indonesia’s GNI per capita was placed fourth the year before.
The majority of Southeast Asian nations are classified as having lower middle incomes by the global bank because the GNI per capita ranges from US$1.136 to US$4.465.
Singapore and Brunei Darussalam are the exceptions, falling under the category of high-income nations with GNI per capita exceeding US$13,845.
Malaysia, Thailand, and Indonesia, on the other hand, are upper-middle-income nations, with GNI per capita ranging from US$4,046 to US$12,535.
For Indonesia to advance from a middle-income country to a high-income country, several things need to be done. The level of prosperity of the populace will be influenced by one of them, per capita income. The poverty rate decreases as per capita income increases.
Additionally, wealthy nations typically export more goods than they import. This shows that a nation has the resources and the ability to produce this product in pace with technological advancements.
It follows that the ability of industrialized nations to create and export their superior commodities is not surprising.
The success of Indonesia in altering its status as an upper-middle-income country—which represents robust economic growth and sustainable development—is a significant accomplishment. This illustrates Indonesia’s potential for future economic growth and reflects Indonesia’s capacity to continue the momentum of economic recovery despite global obstacles. (AKR/TB)