OECD Economic Survey of Indonesia 2024 - Presentation

OECD ECONOMIC SURVEY OF

INDONESIA Building a prosperous and green nation Jakarta 26 November 2024 https://oe.cd/INDONESIA @OECDeconomy @OECD

Activity has recovered from the COVID-19 pandemic and remains strong Growth of real gross domestic product (%) 8 Indonesia

OECD

6 4 2 0 -2 -4

-6

2014

2015

2016

2017

2018

2019

Source: OECD Economic Outlook database.

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2020

2021

2022

2023

Solid growth has led to rapid improvements in living standards Gross domestic product per capita USD (log scale) 32 000

Indonesia

Average of Malaysia, Philippines, Thailand, Viet Nam

16 000

8 000

Note: Gross domestic product is expressed in current international dollars converted by purchasing power parity (PPP) conversion factors.

Source: World Bank World Development Indicators.

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2022

2020

2018

2016

2014

2012

2010

2008

2006

2004

2002

2 000

2000

4 000

Poverty continues to decline

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Investing in energy security will be key

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Monetary policy has contributed to a decline in inflation Inflation and policy rate % 8

% 12

Inflation target band

Headline inflation (year-on-year)

Policy rate

Inflation: food (year-on-year, right axis)

Source: CEIC; and Statistics Indonesia (BPS).

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Oct-2024

Jul-2024

Apr-2024

Jan-2024

Oct-2023

Jul-2023

Apr-2023

Jan-2023

Oct-2022

Jul-2022

Apr-2022

Jan-2022

Oct-2021

Jul-2021

Apr-2021

Jan-2021

Oct-2020

Jul-2020

Apr-2020

Jan-2020

Oct-2019

0

Jul-2019

0

Apr-2019

3

Jan-2019

2

Oct-2018

6

Jul-2018

4

Apr-2018

9

Jan-2018

6

Strong economic growth is projected to continue 2023

2024

2025

Real GDP growth, %

5.0

5.1

5.2

Consumer price inflation, %

3.7

2.3

2.2

Government financial balance, % of GDP

-1.5

-2.7

-2.5

Source: OECD Economic Outlook 116 (preliminary) and OECD calculations.

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Ensuring stable public finances

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Public debt is comparatively low General government debt, % of GDP 90

2022

2015

75 60 45 30 15 0

Viet Nam

Indonesia

Thailand

Note: Data refer to the total stock of debt liabilities issued by general government.

Source: IMF Global Debt Database.

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Philippines

Malaysia

Fiscal and growth reforms are key to contain public debt General government total liabilities, % of GDP 50 45 40 35 30

Baseline scenario Stronger revenues

25

Stronger revenues and growth-enhancing reforms 20

2010

2015

2020

2025

2030

2035

2040

2045

Note: The baseline scenario assumes government spending to increase by 0.5 percentage points of GDP annually between 2026 and 2030 as green investments increase substantially, and by 0.3 percentage points annually over the following fifteen years, with the deficit rising by 1 percentage points of GDP over the next five years. In the reform scenario, stronger revenues (increased taxation and efficiency savings) help to absorb new spending without increasing the deficit. With additional growthenhancing reforms, GDP growth converges to 7% over the next decade.

Source: OECD Economic Outlook, No. 115; IMF, World Economic Outlook database; and OECD calculations.

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Broader tax bases would boost government revenue and provide funds for better public services General government revenue, % of GDP 20 Indonesia

Selected peer countries

18 16

14 12

Note: Peer countries refer to the unweighted average of data for Malaysia, Philippines, Thailand, and Viet Nam. Source: OECD Global Revenue Statistics Database.

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2021

2019

2017

2015

2013

2011

2009

2007

2005

8

2003

10

Raising productivity

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Labour productivity can be improved GDP per worker, 2022 USD, thousands 200 160

120 80 40 0

Note: Data are based on GDP at constant prices per worker using the 2017 PPP. Source: APO Productivity Databook 2024.

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Reducing out of pocket expenses could raise school attendance and student performance Mean PISA reading score 600

450

300

Indonesia

OECD

150

0

2006

2009

2012

2015

2018

2022

Note: The OECD’s Programme for International Student Assessment (PISA) measures 15-year-olds’ ability to use their reading, mathematics and science knowledge in tests based on real-life scenarios. The OECD aggregate covers 23 OECD countries. It does not include Austria, Chile, Colombia, Costa Rica, Estonia, Israel, Lithuania, Luxembourg, the Netherlands, the Slovak Republic, Slovenia, Spain, Türkiye, the United Kingdom, and the United States.

Source: OECD PISA databases.

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Easing regulatory burdens would support competition Product Market Regulation Index, selected indicators Index from 0 (most) to 6 (least) competition-friendly regulation 6 5

Indonesia

OECD average

4 3 2 1

0

Note: The information used to build all the PMR indicators refers to the laws and regulations into force on 1 January 2023 or 2024. When the regulatory issues included in the PMR indicators are not set at the federal level for Indonesia, the information refers to the Special Capital Region of Jakarta.

Source: OECD PMR database and OECD-WBG PMR database for 2023/2024.

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Safeguarding the independence of the anti-corruption body would help increase integrity 90

Corruption perceptions index Scale from 0 (worst) to 100 (best), 2023

80 70 60 50 40 30 20 10 0

Note: EMERG20 refer to G20 emerging countries excluding Indonesia (Argentina, Brazil, China, India, Mexico, Türkiye, and South Africa). Data for this group are calculated as an unweighted average.

Source: Transparency International.

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Greater support for maternity leave would help increase women’s role in the economy Female labour force participation rate (%), 15-64 years, 2022 100 80 60 40

0

IND TUR MEX ZAF IDN ITA CSR COL CHL BRA GRE KOR BEL POL USA ISR LUX CZE FRA OECD ESP IRL SVK HUN SVN AUT JPN LVA GBR DEU PRT AUS CAN NOR DEN LTU NZL FIN CHE EST NLD SWE ISL

20

Note: 2019 for Indonesia. The gender gap corresponds to the percentage-point difference between male and female labour force participation rate.

Source: OECD Employment database.

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Reaping the benefits of digitalisation

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Relatively few firms use digital technologies Percent of firms having their own website, 2023 or latest year 90 75 60 45 30 15 0

Indonesia

Viet Nam

India

Malaysia

Singapore

Türkiye

Mexico

South Africa

Note: Data refer to 2022 for India, 2020 for South Africa and 2019 for Malaysia and Türkiye. The surveyed firms respond to the following question: at the present time, does this establishment use its own website?

Source: World Bank Enterprise Surveys Database.

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Reducing barriers to installing telecommunications infrastructure would boost access to high-speed internet Number of fibre-based subscribers as a share of total households, September 2023 % of total households

100 80 60 40 20

0

Note: The fibre penetration rate is the share of the number of subscribers for Fibre to the Home (FTTH) and Fibre to the Building (FTTB) in the total households.

Source: FTTH Council Europe, FTTH/B Global Ranking 2024.

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A more competitive telecommunications sector would help reduce the cost of broadband Prices of fixed-broadband basket (5GB), 2023 % of gross national income per capita 6 5 4 3

2 1 0

Note: The fixed broadband basket (5GB) refers to the cheapest plan providing at least 5GB of monthly high-speed data (above 256Kbit/s) from the operator with the largest market share in each economy. It is calculated as a percentage of a country’s average monthly GNI per capita. OECD refers to the unweighted average of data for 38 member countries.

Source: ITU World Telecommunication/ICT Indicators Database.

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Stronger co-ordination of online public service providers would strengthen e-government E-Government Development Index (EGDI), 2022 Scale from 0 to 1 (highest) 1.0 0.8

0.6 0.4

0.0

IND PHL VNM IDN COL ZAF MEX CRI THA MYS HUN BRA TUR SVK CZE CHN ARG CHL POL SAU LVA LTU SVN JPN ARE SGP USA NLD EST AUS NZL

0.2

Note: The EGDI is a composite indicator that measures the readiness and capacity of national institutions to use ICTs to deliver public services. It is the weighted average of three normalised indices: 1) telecommunications Infrastructure Index; 2) Human capital Index; and 3) Online Service Index. The higher the EGDI is, the higher is the level of e-government development in a country.

Source: UN e-Government Knowledgebase (UNeGovKB).

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Accelerating the climate transition

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Extreme weather events have become more common in recent years Climate-related events by type (number) 30 Flood

Other

25 20 15 10

2023

2022

2021

2020

2019

2018

2017

2016

2015

2014

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

0

2000

5

Note: Based on CRED/UCLouvain (2024), the International Disaster Database (EM-DAT, www.emdat.be). Other events include drought, mass movement, storm and wildfire.

Source: OECD, “Adapting infrastructure to changing climatic conditions: The case of Indonesia”, OECD Environment Policy Papers (forthcoming).

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Meeting emissions targets will require more renewable energy and reduced carbon-based fuel use GHG emissions: trends and targets, 2005-60 Million Tonnes of CO2 equivalent 2 500 2 000 2030 target : -43.20% 1 500 1 000 500

Note: The 2030 target is relative to Business-as-usual (BAU) projections where no countermeasure is implemented, and is based under countermeasure (conditional mitigation scenarios, CM2) from the Enhanced Nationally Determined Contribution Report by Indonesia to the UNFCCC (2022).

Source: Laporan Inventarisasi Gas Rumah Kaca (GRK) Dan Monitoring, Pelaporan, Verifikasi (MPV) 2023, Volume 9, Januari 2024; and MoEF (2022), Enhanced Nationally Determined Contribution (NDC) under the United Nations Framework Convention on Climate Change (UNFCCC).

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2060

2055

2050

2045

2040

2035

2030

2025

2020

2015

2010

2005

0

Net-zero target

More carbon taxation would help decarbonise the electricity sector Electricity generation by energy source, 2021 or 2022 % of electricity produced Coal

Oil

Natural gas

Nuclear

Biofuels and waste

Other renewables

100 80 60 40 20 0

Argentina

Brazil

OECD

Indonesia

Note: Other renewables include hydro, wind, solar, geothermal and other energies.

Source: IEA, Electricity Information (database).

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China

India

South Africa

Road pricing and congestion charges would help reduce emissions related to road transport CO2 emissions from combustion per unit of GDP from road and other transports, 2021 Tonnes of CO2 per million USD 150 Road

Other transports

120 90 60 30

0

Note: EMERG20 refers to G20 emerging economies excluding Indonesia: Argentina, Brazil, China, India, Mexico, South Africa, Saudi Arabia, Russia, and Türkiye.

Source: IEA (2023), GHG emissions from energy; and World Bank (2024), World Development Indicators.

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OECDEconomy OECD

For more information

oe.cd/INDONESIA

Disclaimers: The statistical data for Israel are supplied by and under the responsibility of the relevant Israeli authorities. The use of such data by the OECD is without prejudice to the status of the Golan Heights, East Jerusalem and Israeli settlements in the West Bank under the terms of international law. This document and any map included herein are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area.

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