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)

If economic growth averages 6 percent, Indonesia will escape the middle-income trap, with per capita income projected to reach 12,535 USD in 2040, he said.

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

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

The COVID-19 pandemic has led to a decline in the per capita gross domestic product (GDP), he said. The GDP per capita moved up to 4,174 USD in 2019 from 3.927 USD in 2018, and then dipped to 3,911 USD in 2020.

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

Indonesia’s 2.07-percent economic contraction is relatively small compared to that in the US (minus 3.5 percent), Mexico (minus 8.3 percent), and the Philippines (minus 9.5 percent), he noted.

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

VNA