Publication: Indonesia Economic Prospects, December 2023: Climate Action for Development
Loading...
Other Files
8,698 downloads
Published
2023-12-13
ISSN
Date
2023-12-13
Author(s)
Editor(s)
Abstract
Indonesia has been successful in navigating the macroeconomic fallout from asynchronous global shocks. Gross domestic product (GDP) growth remains strong though the economy is yet to fully recover to its pre-pandemic trajectory. This is consistent with labor market trends, which show a recovery in labor force participation and employment but a possible deterioration in jobs quality. Inflation has been brought under control following the effects of the energy price shocks in 2022, though new pressures are emerging from food supply risks and renewed oil price rises. External pressures have risen due to tight global financing conditions, which have triggered capital outflows and currency pressures across emerging markets including Indonesia. With resilient macroeconomic underpinnings and the end of the post-COVID recovery cycle, the policy focus turns again to the growth agenda.
Link to Data Set
Citation
“World Bank. 2023. Indonesia Economic Prospects, December 2023: Climate Action for Development. © World Bank. http://hdl.handle.net/10986/40729 License: CC BY-NC 3.0 IGO.”
Digital Object Identifier
Associated URLs
Associated content
Other publications in this report series
Journal
Journal Volume
Journal Issue
Related items
Showing items related by metadata.
Publication Indonesia Economic Prospects, December 2021(World Bank, Washington, DC, 2021-12-15)The Indonesia Economic Prospects (IEP) is a bi-annual World Bank report that assesses recent macroeconomic developments, outlook and risks, as well as specific development challenges for the Indonesian economy. In doing so, the IEP aims to inform the public policy debate and is geared towards a wide audience, including the general public, the government, the private sector, civil society organizations, and other domestic and international stakeholders.Publication Philippines Economic Update, December 2023(Washington, DC: World Bank, 2024-02-13)The Philippines Economic Update (PEU) summarizes key economic and social developments, important policy changes, and the evolution of external conditions over the past six months. It also presents findings from recent World Bank analyses, situating them in the context of the country’s long-term development trends and assessing their implications for the country’s medium-term economic outlook. The update covers issues ranging from macroeconomic management and financial-market dynamics to the complex challenges of poverty reduction and social development. It is intended to serve the needs of a wide audience, including policymakers, business leaders, private firms and investors, and analysts and professionals engaged in the social and economic development of the PhilippinesPublication Senegal Economic Update, December 2014 : Learning from the Past for a Better Future(Washington, DC, 2014-12)Gross domestic product (GDP) growth was a disappointing 3.5 percent in 2013. It remained largely unchanged compared to 2012, reflecting a decline in cereal production and stagnation in the industrial sector. Services continue to drive the economy. The economic outlook for 2014 was more positive, but poor rainfall and the Ebola outbreak have forced downward revisions in GDP growth projections, now expected to reach 4.5 percent. The plan Senegal emergent aims to break with this trend, with a welcome focus on higher economic growth. However, its ambitions may exceed available resources and will likely depend on accelerated reforms and a strong private sector response. This first economic update begins with an overview of the macroeconomic situation in Senegal, starting with a review of 2013 before examining the initial results of 2014. After a brief look at the challenges posed by unemployment and poverty, the report turns to an assessment of the growth strategy. It presents analysis of past performance since 1990 in order to understand better what needs to be done differently. The report concludes with a few recommendations.Publication Indonesia Economic Prospects, December 2024(Washington, DC: World Bank, 2024-12-19)Indonesia’s economy remains resilient, buoyed by strong domestic demand and a recovering service sector. The current account deficit widened, driven by moderating terms of trade and cyclical factors that intensified services and income outflows. After two years of consolidation, the fiscal policy stance loosened slightly. Meanwhile, Bank Indonesia (BI) has been incrementally easing its policy stance while managing currency stability. Indonesia needs to significantly increase tax revenues to investment in human and physical capital to achieve its high-income status ambitions. The country’s public capital stock lag regional and structural peers, falling far short of advanced economies. Closing these gaps could enhance productivity growth and support the sustained 6 percent growth required to reach high-income status by 2045. However, the investment needed is substantial. A significant portion of this must be financed through increased tax revenues, as a substantial rise in debt would be risky and would violate statutory caps on deficit and debt levels. Overall, increasing tax revenues will require reforms that widen the tax base, improve tax administration, and address structural constraints to compliance. Reforms to widen the tax base could lower the registration threshold for VAT to align with middle-income country norms, which also applies to the temporary final tax for MSMEs. Meanwhile, a permanent final tax regime could be introduced for MSMEs below the threshold. Special CIT treatments, such as for construction services, publicly listed firms, and non-standard VAT exemptions, may be phased out gradually. Tax incentives need to become more strategic, time-bound, and systematically reviewed. Improving compliance requires better risk management, using high-quality third-party data and integrating fragmented government systems. Simplifying and clarifying VAT regulations can reduce disputes and administrative burdens. Lastly, addressing structural constraints involves deepening financial sector depth, which is expected to have the secondary effect of facilitating compliance through improved information and formalization.Publication Indonesia Economic Quarterly, December 2009(Jakarta, 2009-12)The Indonesian economic quarterly reports on and synthesizes the past three month s key developments in Indonesia s economy. It places them in a longer-term and global context, and assesses their implications for the outlook for Indonesia s economic and social welfare. Its coverage ranges from the macro economy to financial markets to indicators of human welfare and development. Indonesia s economy appears to be broadly backed on track. Economic activity has been picking up, inflation has remained moderate, financial markets have risen, and the newly reelected government, having established the strong fundamentals that supported Indonesia through the global crisis, appears to be now gearing up for new investments in Indonesia s physical infrastructure, human services and institutions of state. Indonesia seems well-positioned to get back on its pre-crisis growth trajectory, with the possibility of further acceleration and more inclusive growth. The sustainability of the global recovery is still not entirely clear and portfolio flows into emerging markets, which have surged in the last nine months, may as easily be reversed as policy makers elsewhere move to unwind the large monetary and fiscal stimulus efforts initiated over the last year.
Users also downloaded
Showing related downloaded files
Publication Morocco Economic Update, Winter 2025(Washington, DC: World Bank, 2025-04-03)Despite the drought causing a modest deceleration of overall GDP growth to 3.2 percent, the Moroccan economy has exhibited some encouraging trends in 2024. Non-agricultural growth has accelerated to an estimated 3.8 percent, driven by a revitalized industrial sector and a rebound in gross capital formation. Inflation has dropped below 1 percent, allowing Bank al-Maghrib to begin easing its monetary policy. While rural labor markets remain depressed, the economy has added close to 162,000 jobs in urban areas. Morocco’s external position remains strong overall, with a moderate current account deficit largely financed by growing foreign direct investment inflows, underpinned by solid investor confidence indicators. Despite significant spending pressures, the debt-to-GDP ratio is slowly declining.Publication Indonesia Economic Prospects, June 2022(Washington, DC: World Bank, 2022-05-31)Indonesia’s economic recovery from the Corornavirus (COVID-19) pandemic comes amidst an increasingly challenging global environment. Indonesia’s growth accelerated at the end of 2021 as the country stepped off from a devastating Delta wave in July-August, ending the year with 3.7 percent growth. The momentum carried into the first quarter of 2022 with the economy growing at 5 percent (yoy) and absorbing a short and sharp increase in Omicron-related COVID cases. Growth drivers since end 2021 have rebalanced gradually from exports and public consumption towards private consumption and investment. Since February, the war in Ukraine has disrupted the global economic environment with rising commodity prices and de-risking in global financial markets. The positive terms-of-trade effect has benefited Indonesia in the near-term through higher export and fiscal earnings. But the country is starting to feel the pressures of rising prices and tightening external finance.Publication Classroom Assessment to Support Foundational Literacy(Washington, DC: World Bank, 2025-03-21)This document focuses primarily on how classroom assessment activities can measure students’ literacy skills as they progress along a learning trajectory towards reading fluently and with comprehension by the end of primary school grades. The document addresses considerations regarding the design and implementation of early grade reading classroom assessment, provides examples of assessment activities from a variety of countries and contexts, and discusses the importance of incorporating classroom assessment practices into teacher training and professional development opportunities for teachers. The structure of the document is as follows. The first section presents definitions and addresses basic questions on classroom assessment. Section 2 covers the intersection between assessment and early grade reading by discussing how learning assessment can measure early grade reading skills following the reading learning trajectory. Section 3 compares some of the most common early grade literacy assessment tools with respect to the early grade reading skills and developmental phases. Section 4 of the document addresses teacher training considerations in developing, scoring, and using early grade reading assessment. Additional issues in assessing reading skills in the classroom and using assessment results to improve teaching and learning are reviewed in section 5. Throughout the document, country cases are presented to demonstrate how assessment activities can be implemented in the classroom in different contexts.Publication Indonesia Economic Prospects : Trade for Growth and Economic Transformation(Washington, DC: World Bank, 2022-12)The Russia-Ukraine war has disrupted global trade and supply chains, exacerbating the rise in global commodity and food prices. Persistently high global inflation accompanied by tepid growth brings fears of stagflation that could endure for several years. Amidst this environment, the US Federal Reserve and other advanced economy central banks sharply tightened monetary policy to curb inflation. This has translated into tighter external financing conditions and financial stress for some emerging markets and developing economies (EMDEs) as capital outflows have intensified. Despite global slowdown, Indonesia has experienced strong growth in 2022 thanks to commodity windfalls and a reopening of the economy. Indonesia’s external vulnerability has been low to moderate as strong exports have supported the external balance although tighter global finances have put some pressure on the capital account. Indonesia is projected to have a robust growth over the next three years though with significant downside risks emanating from the global economic environment. To address current macrofiscal policy challenges, the report highlights three policy and institutional areas that may warrant attention going forward. The first is about continuing with the implementation of tax reforms to broaden the tax base and improve compliance of business tax collection. The second is related to public spending where the authorities could over time move towards a rules-based pricing model for energy to contain subsidy pressures. The third is improving targeting and expanding coverage of existing social assistance and social insurance programs. This means filling coverage gaps, developing a system that provides a guaranteed minimum protection across the lifecycle, and strengthening delivery systems.Publication Indonesia Economic Prospects, June 2023(Washington, DC: World Bank, 2023-06-26)Commodity windfalls and private consumption have sustained Indonesia’s growth despite a difficult global environment, but signs of normalizing domestic demand are emerging. Inflation is easing at a faster pace than markets anticipated. Indonesia’s external vulnerabilities remain moderate. The fiscal stance has normalized reflecting faster fiscal consolidation, anchored by a broad-based rise in revenues and prudent public spending. Softening inflation and resilient capital flows have led Bank Indonesia (BI) to ease its pace of monetary tightening. The outlook remains stable as the economy normalizes following the post-pandemic recovery. While this is a robust outcome given levels of global uncertainty, Indonesia still faces declining productivity growth like other emerging market economies. Policy makers are encouraged to build on recent reforms and adopt further market-friendly policies and reduce constraints to competition to accelerate productivity growth. The Government of Indonesia (GoI) has put tremendous efforts into mitigating the learning disruption caused by COVID-19. This study provides new evidence of learning loss in math and language, comparing data on grade 4 student learning before and after the COVID-19 pandemic-induced school closures across Indonesia. In line with international literature on COVID-19 - induced learning losses, students’ future earnings and Indonesia’s future productivity will be negatively affected if no action is taken. This study highlights the urgency of addressing learning loss by stimulating political commitment for learning recovery and prompting deliberate actions, with adequate resources to complete them.