Indonesian economy must grow 6-7 pct. to escape middle-income trap

Loading and unloading activities at the Tanjung Priok Port in North Jakarta on March 15, 2021. (Photo: Antara)

Jakarta (VNA) - The Indonesian economymust grow between 6-7 percent from 2022 to escape the middle-income trap,Minister of National Development Planning and head of the National DevelopmentPlanning Agency (Bappenas) Suharso Monoarfa has said.

If economic growth averages 6 percent, Indonesiawill escape the middle-income trap, with per capita income projected to reach12,535 USD in 2040, he said.

An economic growth of 5 percent in the wake of theCOVID-19 pandemic will not be enough for Indonesia to escape the middle-incometrap before 2045, the minister projected.

Accordingly, the unemployment rate will not be ableto return to the pre-crisis level, he added.

The COVID-19 pandemic has led to a decline in theper capita gross domestic product (GDP), he said. The GDP per capita moved upto 4,174 USD in 2019 from 3.927 USD in 2018, and then dipped to 3,911 USD in2020.

Meanwhile, per capita gross national income (GNI) declinedto 3,810 USD in 2018, then climbed to 4,047 USD in 2019 before falling to 3,806USD in 2020.

Indonesia’s 2.07-percent economic contraction isrelatively small compared to that in the US (minus 3.5 percent), Mexico (minus8.3 percent), and the Philippines (minus 9.5 percent), he noted.

The key to higher economic growth is controlling thespread of COVID-19 until the country can achieve community immunity, he said./.

VNA