Expert Talks of Impact of Indonesia's Return to Be Upper-middle-income Country
Translator
Editor
6 July 2023 10:34 WIB
TEMPO.CO, Jakarta - The World Bank listed Indonesia in the group of upper-middle-income countries again. President Joko "Jokowi" Widodo announced this when opening the Cabinet Plenary Meeting at Jakarta State Palace on Monday, July 3, 2023.
“This is a rapid recovery process after we were relegated to the lower-middle income countries' group due to the COVID-19 pandemic in 2020,” the President said before his cabinet ministers on Monday.
However, he emphasized that Indonesia would face challenges in the second half of 2023 given global instability and ongoing geopolitical tensions.
Bhima Yudhistira, an economist from the Center of Economic and Law Studies (Celios), highlighted the impact of Indonesia reacquiring upper-middle income status.
He assessed that the status hike was driven by the recovery of public mobility after the pandemic and rising commodity prices. At present, however, commodity prices have been dropping, so net export could be corrected and Indonesia is at risk of falling again to lower-middle-income status.
“We see that there are indeed many benefits, such as credit rating. It is announced today that we (Indonesia) still get triple B from Credit Rating Agency, which is deemed that expectations of default risk can still be controlled,” Bhima explained when met in Tanah Abang, Central Jakarta, Wednesday, July 5.
Yet, he opined that the upper-middle-income status has many weaknesses. For example, Indonesia may no longer get grants from developed countries and loans with relatively lower interest. The status also did not guarantee that all citizens get the benefit as inequality issues stay existing.
“The process from a lower-middle-income country to an upper-middle-income country is not difficult as to be a high-income country. So we can’t be proud of this,” Bhima remarked.
According to the economist, it takes 7 to 8.5 percent average growth after the COVID-19 pandemic to become a developed country. He projected that with the economy growing by an average of 5 percent, Indonesia will achieve the status in 2070.
“This is not [in line with the vision of] Golden Indonesia 2045, but it’s predicted in 2070. And that means it takes a lot of time, we can even get caught in the middle-income trap,” Bhima concluded.
AMELIA RAHIMA SARI | ANTARA
Editor's Choice: Sri Mulyani Talks of Keys to Escape Middle-Income Trap
Click here to get the latest news updates from Tempo on Google News
