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Indonesia GDP per capita has been growing steadily at around 4% annually, gradually narrowing the large gap with the upper half of OECD countries. Growth has continued to be driven by productivity growth. Poverty rates have fallen steadily and income inequality appears to have moderated in recent years. Nonetheless, inequality is pronounced, in particular between regions. Greenhouse gas emissions are low per capita. Land use change is a major contributor to Indonesia’s total emissions as well as biodiversity loss. Considerable progress has been made in infrastructure provision, particularly transport. Efforts to streamline regulation and administrative processes have improved the business environment. While electricity subsidies have been reduced, fuel subsidies have increased, including by shifting some to state-owned enterprises. New electricity tariff regulations for independent power producers discourage private sector investment in renewable energy. Tackling informality and increasing the share of high-quality formal sector jobs, requires measures such as improving skills by raising the quality of teaching and reducing barriers to formal sector employment such as high minimum wages and dismissal costs. Continuing to improve the quality of regulation and governance remains crucial for raising investment and encouraging formalisation. Greater regulatory certainty would help improve private sector participation in infrastructure investment. Growth performance, inequality and environment indicators: Indonesia C. The large gaps in GDP per capita and productivity have diminished rather slowly
A. Growth Average annual growth rates (%) GDP per capita
2002-08 4.0 0.4 3.6
1
Labour utilisation Labour productivity
2012-18 3.8 0.3 3.4
Gap to the upper half of OECD countries4
Per cent 0 -10
B. Inequality and environment Level
-20 -30
2015
2013-18 0 -0.6 Average of levels 2010-2012-2015
GHG emissions per capita3 (tonnes of CO2 equivalent)
3.7 (12.3)*
3.5 (12.8)*
GHG emissions per unit of GDP3 (kg of CO2 equivalent per USD) Share in global GHG emissions3 (%) * OECD simple average (weighted average for emissions data)
-60
0.4 (0.3)* 1.9
0.4 (0.4)* 1.8
-70
Gini coefficient for rural areas2 Gini coefficient for urban areas2
2018 32.2 39.6
Annual variation (percentage points)
-40 -50
-80 -90 GDP per capita
GDP per employee
-100
Source: Panel A: OECD, Economic Outlook and Productivity Databases; Panel B: Statistics Indonesia; OECD, Income Distribution and National Accounts Databases; International Energy Agency (IEA), Energy Database; Panel C: OECD, Economic Outlook and Productivity Databases. StatLink 2 https://doi.org/10.1787/888933955009