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The Seventh Largest Economy In The World Emphasizes That The Quality Of Economic Growth Is More Significant Than The Quantity
Friday, 31 Jan 2025
Indonesia's ranking has improved among the world's largest economies. The International Monetary Fund (IMF) has reported that Indonesia's position has risen to seventh place among the largest economies globally as of January 2025.
This advancement is based on the Gross Domestic Product (GDP) adjusted for purchasing power parity (PPP). Previously, in 2024, Indonesia held the eighth position in terms of global economic size.
However, Yusuf Rendy Manilet, an economist at the Center of Reform on Economics (CORE) Indonesia, emphasized that alongside the IMF's projections, the government must focus on the quality of Indonesia's GDP growth.
Yusuf pointed out that income inequality in Indonesia remains relatively high, indicating that the aggregate GDP figure does not reflect inclusivity for all socioeconomic groups.
"Efforts to reduce inequality are also crucial for sustaining long-term economic development," Yusuf stated in an interview with Kontan on Wednesday, January 29.
The Central Statistics Agency (BPS) has reported that Indonesia's income inequality, measured by the Gini ratio, has widened. As of September 2024, the Gini ratio increased to 0.381, up from 0.379 in March 2024. A higher Gini ratio indicates greater inequality.
Regarding Indonesia's ranking, Yusuf believes that the IMF's calculations could lead to an improved position, provided there is an enhancement in the structure of the GDP itself.
The GDP structure comprises the three largest sectors contributing to the total GDP: manufacturing, agriculture and plantations, and trade.
However, he noted that maintaining growth in these three sectors is challenging. Currently, the domestic manufacturing industry faces issues related to design, limited investment, and fundamental or structural challenges such as the investment ecosystem and long-term political stability.
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