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Can Jokowi bring the dynamism Indonesia’s economy so badly needs?

32 7 19

INDONESIA has achieved almost 20 years of continuous economic growth.

The country navigated the 2008 global financial crisis with little difficulty and effectively weathered the emerging market volatilities of 2018. It has adjusted to the end of the China-driven commodity boom more effectively than the commodity-exporting members of the now-forgotten BRICS (Brazil, Russia, India, China and South Africa) group.

Despite this record, the economy isn’t growing fast enough to meet the growing aspirations of its people or to make significant inroads into poverty — a challenge compounded by the sizeable increase in inequality this century.

The new normal is five percent growth. While that’s faster than the global economy, it’s well behind contemporary Asian frontiers set by India, China, Vietnam, and even the Philippines.

SEE ALSO: Indonesia: Why Jokowi and Prabowo won’t be getting the indigenous vote

It’s also well short of President Jokowi’s 2014 election campaign pledge of seven percent growth. The difference matters: seven percent growth implies a quadrupling of real per capita incomes every 28 years, where five percent growth delivers just a doubling every 23 years.

Why isn’t Indonesia growing as fast as the two Asian giants and some of its neighbours?

Jokowi had the misfortune of coming to office just as the commodity boom was ending. Government and businesses were being forced to adjust to the end of a decade of easy growth. Some slowing down in the economic momentum was inevitable. But four years on, economic growth has yet to accelerate despite a moderate increase in commodity prices and the ongoing income effects of the boom.

The factors explaining this lack of economic dynamism are mainly domestic.

Governor Bank of England Governor Mark Carney, Indonesia Finance Minister Sri Mulyani Indrawati, World Bank President Jim Yong Kim, Indonesia President Joko Widodo, IMF Managing Director........

© Asian Correspondent