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Economic Overview

For the latest updates on the key economic responses from governments to address the economic impact of the COVID-19 pandemic, please consult the IMF's policy tracking platform Policy Responses to COVID-19.

Indonesia is seen as a future economic giant. It is the largest economy in Southeast Asia and the world's seventh by purchasing power parity (World Economics, 2022). Due to the COVID-19 pandemic, the country registered negative GDP growth for the first time since 1998, going from +5% in 2019 to -2.1% in 2020. The GDP growth rate for 2021 was back in the positive territory with an estimated +3.7% and +5.3% in 2022 (IMF, October 2022). The usual key drivers of the economy are private domestic consumption - stimulated by its huge market with a growing middle class of over 70 million people (55% of GDP), while the major issues are the ongoing trade tensions between China and the US, the country's two biggest trading partners, and the prolonged depreciation of the Rupiah. According to the IMF's October 2022 forecast, GDP growth is expected to stay high at 5% in 2023 and 5.1% in 2024, subject to the post-pandemic global economy recovery.

According to the IMF, the budget deficit rose from 2.2% of GDP in 2019 to 5% in 2020 and 3.7% in 2021.The deficit stabilised at 3.3% in 2022 and is expected to remain at 2.7% in 2023 and 2024. Inflation reached 1.6% in 2021 and increased to 4.6% in 2022. It is expected to stay high in 2023 at 5,5% before coming down at 3.4% in 2024 (IMF, October 2022). Public debt has shown a significant improvement since the Asian Financial Crisis in 1998 (it reached up to 150% of GDP), but it rose slightly to 30.6% of GDP in 2019 before climbing again due to the COVID pandemic to 39.8% in 2020 and 41.2% in 2021. The debt remained at 40.9% in 2022 and is expected to stabilise at 40.4% in 2023 and 2024 (IMF, October 2022). Three social programmes (RPJMN, PNPM Urban and PAMSIMAS) have been launched to ensure that the poorest strata of the population have access to healthcare and education. Other structural issues that remain to be tackled include a large public infrastructure gap, high labour informality and youth unemployment, and low educational attainment. Environmental protection also remains a major challenge. The government hopes to take advantage of the country's strategic location between Asia and the Pacific in the current unfavourable international context (weakening demand from China and falling commodity prices), and aims to be in the top six largest economies by 2030.

Although it has been decreasing over the last decade the unemployment rate has sharply increased from 5.2% in 2019 to 7.1% in 2020 before reaching 6.5% in 2021 and 5.5% in 2022. It should remains relatively high for the region in 2023 and 2024 with 5.3% and 5.2% respectively (IMF, October 2022). The number of people working in vulnerable conditions has also increased in 2022. Indonesia has achieved enormous gains in poverty reduction, cutting the poverty rate by more than half since 1999, to approximately 9.8% of the population in 2020. The effect of the pandemic pushed it to 10.4% in 2021 and 9.5% in 2022 (World Bank, 2022). Indeed, the country has still one of the fastest rising inequality rates in the East Asia region according to World Bank. In a few months, the pandemic reversed some hard-won advances in well-being, with poverty, malnutrition, and even hunger rising fast (OECD, 2022).

In 2023, the country’s most immediate challenge will be to navigate the volatile international context, facing steep challenges against a backdrop of the persistent health and economic overhang of a global pandemic and a war in Europe, a cost-of-living crisis caused by persistent and broadening inflation pressures, and the slowdown in China.

Main Indicators 202020212022 (E)2023 (E)2024 (E)
GDP (billions USD) 1,062.531,187.731,318.811,391.781,508.55
GDP (Constant Prices, Annual % Change) -
GDP per Capita (USD) 3,9324,3634,7985,0175,388
General Government Balance (in % of GDP) -5.3-3.9-2.1-2.6-2.5
General Government Gross Debt (in % of GDP) 39.741.139.939.138.8
Inflation Rate (%)
Unemployment Rate (% of the Labour Force)
Current Account (billions USD) -4.433.5113.22-3.81-11.14
Current Account (in % of GDP) -

Source: IMF – World Economic Outlook Database , October 2021

Country Risk

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Main Sectors of Industry

Indonesia is a market economy with abundant natural resources, a young, large and burgeoning population (277.7 million), a labor force of 135 million people in 2022, and political stability. The country changed from being an economy that was highly dependent on agriculture into a more balanced economy which is lessening its traditional dependency on primary exports. The agricultural sector contributes to 13.3% of the country’s GDP and employed 29% of the active population in 2022 (World Bank, 2023). Indonesia is the second-largest natural rubber producer in the world. Other major crops include rice, sugarcane, coffee, tea, tobacco, palm oil, coconuts and spices. Besides, the country is the world's biggest nickel ore producer and has become a major exporter of stainless steel. Indonesian land area used for agriculture has been growing, and is currently around 30%. This is mainly due to the establishment of large-scale plantations - in particular for palm oil production (second-largest export). Indonesia is the only Asian country to have been a member of the OPEC, although its membership is frozen since December 2017 because it would not agree to production cuts mandated by OPEC.

Industry contributed approximately to 39.9% of GDP and employed over 23% of the labour force in 2022 (World Bank, 2023). The industrial sector includes manufacturing of textiles, cement, chemical fertilisers, electronic products, rubber tyres, clothing and shoes (most of these are for the American market). Wood processing is also a major activity as the country is one of the world's largest timber producers. The implementation of the Indonesian-EU Forest Law Enforcement, Governance and Trade (FLEGT) to combat illegal logging is making progress and Indonesia has become the first country in the world to receive an exemption from screening to ensure its timber is sourced in accordance with EU regulations. Over 3 million hectares of Indonesian forests are certified, and over 2.2 million hectares among then are natural production forest concession.

The service sector (financial institutions, transportation and communications) contributes to 42.8% of the GDP and employed around 48% of the active population in 2022 (World Bank, 2023). The banking sector is well developed and the Islamic bank Syaria has expanded rapidly in recent years. Tourism is a major source of revenue, although the sector has suffered from terrorist threats and natural catastrophes in the past few years. The government was expecting the country to become a leading Asian and World tourism destination by 2045 with 73 million tourists. The country is still waiting for the positive effects of world's borders opening.

Global economic activity is experiencing a broad-based and sharper-than-expected slowdown, with inflation higher than seen in several decades. The cost-of-living crisis, tightening financial conditions in most regions, Russia’s invasion of Ukraine, and the lingering COVID-19 pandemic all weigh heavily on the outlook.  Global growth is forecast to slow from 6.0 percent in 2021 to 3.2 percent in 2022 and 2.7 percent in 2023, the weakest growth profile since 2001 except for the global financial crisis and the acute phase of the COVID-19 pandemic. Global inflation is forecast to rise from 4.7 percent in 2021 to 8.8 percent in 2022 but to decline to 6.5 percent in 2023 and to 4.1 percent by 2024 (International Monetary Fund - IMF, 2023). The impact of the 2022 world events appears to have affected both sides of most sectors and markets in this country for the third year in a row - demand disruptions having run up against supply problems - making the short-term outlook uncertain for agriculture, industry and service sectors.

Breakdown of Economic Activity By Sector Agriculture Industry Services
Employment By Sector (in % of Total Employment) 28.5 22.4 49.1
Value Added (in % of GDP) 13.3 39.9 42.8
Value Added (Annual % Change) 1.8 3.4 3.6

Source: World Bank - Latest available data.

Monetary Indicators 20162017201820192020
Indonesian Rupiah (IDR) - Average Annual Exchange Rate For 1 USD 13,308.3313,380.8714,236.9414,147.7014,582.20

Source: World Bank - Latest available data.



Foreign Trade

Indonesia is open to foreign trade, which represented 40% of its GDP in 2022 (World Bank, 2023). The main exports are Mineral fuels, oils, distillation products (19% of all exports in 2021), animal, vegetable fats and oils, cleavage products (14%), iron and steel (9%), Electrical and electronic equipment (5.1%) and vehicles other than railway and tramway (3.7%). Indonesia mostly imports machinery, nuclear reactors, boilers (13%), Electrical and electronic equipment (11%), Mineral fuels, oils, distillation products (15%), plastics (5.2%), iron and steel (6.1%). Indonesia became the world's largest exporter of thermal coal used in power stations in 2019 and has two major customers, China and India, the planet's two largest coal importers.The International Monetary Fund (IMF) is forecasting a rebound of 1.6% in the volume of exports of goods and services of the country in 2023, after an increase of 0.8% in 2022, and an increase of more than 7.8% of its imports, after +8.5% in 2022.

China remained Indonesia's largest trading partner in 2022, buying up 24% of exports, followed by the United States (12%), Japan (8%) and India (5.9%). The main suppliers are China (29%), Singapore (8.1%); Japan (7.6%), and the United State (5.9%). China and Indonesia are forging closer economic ties as the two countries face threats to their trade relations with the United States since the protectionist actions taken by President Donald Trump and the cautious approach of his successor. On the 15th of November 2020 Indonesia has signed the Regional Comprehensive Economic Partnership (RCEP) with 14 other Indo-Pacific countries. This free trade agreement is the largest trade deal in history, covering 30 per cent of the global economy. It includes the Association of Southeast Asian Nations (ASEAN : Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, and Vietnam) and ASEAN’s free trade agreement partners (Australia, China, India, Japan, New Zealand and Republic of Korea). The RCEP covers goods, services, investment, economic and technical cooperation. It also creates new rules for electronic commerce, intellectual property, government procurement, competition, and small and medium sized enterprises.

Indonesia's trade surplus widened to USD 3.51 billion in December 2021 from USD 2.61 billion the previous year. According to the latest data published by BPS-Statistics Indonesia, Indonesia amassed a USD3.89 billion trade surplus in December 2022, thereby maintaining a positive trade balance since May 2020, despite retreating from USD5.13 billion the month earlier.  For the period from January-December 2022, therefore, the overall trade surplus stood at USD54.46 billion, up significantly from USD35.42 billion in the same period of 2021 (Bank Indonesia, 2023).  Bank Indonesia is confident the ongoing trade surplus is contributing to solid external economic resilience in the country.  Moving forward, this banking institution will continue to strengthen its policy synergy with the Government and other relevant authorities to bolster external resilience and strengthen national economic recovery momentum.

For the full year of 2022, exports climbed by 26.07 percent from the same period in 2021 to USD 291.98 billion. Imports to Indonesia dropped by 6.61 percent year-on-year, the largest fall in two years, to a six-month low of USD 19.94 billion in December of 2022, quickening from a 1.89 percent fall in the prior month, and compared with market forecasts of a 7.58 percent decline (World Bank, 2023).The country is betting on bilateral and multilateral trade agreements to revive the non-oil exports within the next five years. President Widodo insists on the need to export less raw materials and more processed goods to create more added value and jobs at home.

Foreign Trade Values 20172018201920202021
Imports of Goods (million USD) 156,925188,708171,276141,622196,041
Exports of Goods (million USD) 168,811180,124167,683163,306229,850
Imports of Services (million USD) 32,59237,64339,20324,45328,711
Exports of Services (million USD) 24,66530,49030,91114,25814,033

Source: World Trade Organisation (WTO) ; Latest available data

Foreign Trade Indicators 20172018201920202021
Foreign Trade (in % of GDP) 39.443.137.633.040.4
Trade Balance (million USD) 18,814-2283,50828,30143,806
Trade Balance (Including Service) (million USD) 11,435-6,713-4,13318,54629,155
Imports of Goods and Services (Annual % Change) 8.112.1-7.1-16.723.3
Exports of Goods and Services (Annual % Change) 8.96.5-0.5-8.124.0
Imports of Goods and Services (in % of GDP)
Exports of Goods and Services (in % of GDP)

Source: World Bank ; Latest available data

Foreign Trade Forecasts 20222023 (e)2024 (e)2025 (e)2026 (e)
Volume of exports of goods and services (Annual % change)
Volume of imports of goods and services (Annual % change) 9.7-0.811.810.49.7

Source: IMF, World Economic Outlook ; Latest available data

Note: (e) Estimated Data

International Economic Cooperation
Indonesia is a member of the following international economic organisations: IMF, Asia-Pacific Economic Cooperation (APEC), ICC, Colombo Plan, WTO, Association of Southeast Asian Nations (ASEAN), G-15, G-20, G-77, among others. For the full list of economic and other international organisations in which participates Indonesia click here. International organisation membership of Indonesia is also outlined here.
Free Trade Agreements
Indonesia is a member of Regional Comprehensive Economic Partnership (RCEP) signed on 15 November 2020. The complete and up-to-date list of Free Trade Agreements signed by Indonesia can be consulted here.

Main Partner Countries

Main Customers
(% of Exports)
China 23.2%
United States 11.2%
Japan 7.7%
India 5.7%
Malaysia 5.2%
See More Countries 47.0%
Main Suppliers
(% of Imports)
China 28.7%
Singapore 7.9%
Japan 7.5%
United States 5.8%
Malaysia 4.8%
See More Countries 45.4%

Source: Comtrade, Latest Available Data



Political Outline

Current Political Leaders
President: Joko Widodo (since 20 October 2014) - PDI-P
Vice-President: Ma'ruf Amin (since 20 October 2019) - Independent
Next Election Dates
Presidential: 2024
House of Representatives: 2024
Current Political Context
The government led by the President Joko Widodo, who was re-elected for a second five-year term in May 2019, focuses on structural reform and improving governance. It has begun a thorough overhaul of the energy subsidy programme, which will fund infrastructure renovation and provide aid to the agricultural sector. With a focus on domestic issues during his second term, the president reaffirmed the reform agenda in 2020, particularly regarding labour, healthcare and infrastructure, in order to lure foreign investments and bolster growth. Seeking to push forward the reform agenda with ease, Joko Widodo brought key opponents into his cabinet to form a broad coalition, hoping that it would weaken critics over the government. The Omnibus Bill was passed and signed into law in October 2020 and could reform labour, taxes and other important laws in order to reduce bureaucracy and stimulate investment in a post-pandemic economy. Moreover, to respond to the COVID-19 crisis, the Government has announced a fiscal package amounting to 4.3 percent of GDP. The package includes funds to improve the preparedness of the health sector and a substantial increase in social assistance.

In 2021, the President Joko Widodo pulled another political party, the National Mandate Party, into his expanding coalition, which now controls 82 percent of the 575 seats in the House of Representatives. Despite growing public concern about pressures on civil liberties and the government’s pandemic difficulties, he remains incredibly popular with Indonesian voters. The President has accelerated the construction of dozens of much-needed highways, ports, and airports, with traffic-clogged Jakarta getting the country’s first-ever subway line in 2019. But in 2021, in the context of an aggravating COVID crisis, he struggled to deliver on his promises of high economic growth, pro-business reform, and improved social welfare.

President Joko Widodo, constitutionally barred from a third term, will lose influence as would-be successors jostle for position ahead of elections in 2024, but he will double down on efforts to attract increasing foreign direct investment into downstream heavy industries before his final term ends in mid-2024. His administration will make only token gestures on other pressing political matters, including addressing the political strife in Indonesia's Eastern provinces and reducing corruption. As Indonesia is bracing for a tumultuous political year in 2023, as parties gear up for the upcoming general elections next year, Joko Widodo's preferred successor, the current governor of Central Java, Ganjar Pranowo, should secure the presidency in 2024. Most other parties in the ruling coalition have yet to nominate their presidential candidates, while those which have are still leaving the door open for changes.

Uncertainties in an election year will undoubtedly have an impact on the economy, especially regarding investments, according to Center of Reform on Economics (CORE) Indonesia executive director Mohammad Faisal.

Main Political Parties
Single parties have little chance of garnering power alone. Thus, parties often work together to form coalition governments. Primary representation in parliament consists of both nationalist secular parties and moderate and Islamic-oriented groups. The major parties are:
Governing Coalition
- Indonesian Democratic Party of Struggle (PDI-P): centre-left, follows Pancasila’ideology based on the five founding principles of the Constitution; split-away group from the PD, led by ex-President Megawati Sukarnoputri
- Party of Functional Groups (Golkar): follows conservative liberalism, advocates democratic and liberal values
- National Awakening Party (PKB): Islamist, Pancasila ideoligy, nationalism
- United Development Party (PPP): Islamic democracy, nationalist islamism, Pancasila ideology
- National Mandate Party (PAN), Islamic democracy, Pancasila ideology
- Democratic Party (PD): centrist, Pancasila ideology
- Prosperous Justice Party (PKS), Islamist, conservative
-Great Indonesia Movement Party (Gerindra), conservatism, nationalism, populism
Executive Power
The President is both the head of the State and the head of the Government. The President enjoys the executive power and appoints the cabinet. Both the President and the Vice-President are elected through direct universal suffrage for five-year terms. The President is the commander-in-chief of the armed forces and responsible for domestic governance and policy-making and foreign affairs.
Legislative Power
The legislature in Indonesia is bicameral. The highest representative body at the national level is the parliament of the country, the People's Consultative Assembly (MPR). It consists of the DPR (House of People’s Representatives - lower house) with 575 members elected directly to serve five-year terms, and the DPD (House of Regional Representatives - upper house) with 136 seats, each province electing 4 members on a non-party basis. The President cannot dissolve the parliament but he has the power to veto bills. In turn, a super-majority of legislators may act to override the veto. The people of Indonesia have limited political rights.


COVID-19 Country Response

Travel restrictions
Regularly updated travel information for all countries with regards to Covid-19 related entry regulations, flight bans, test and vaccines requirements is available on TravelDoc Infopage.
To find information about the current travel regulations, including health requirements, it is also advised to consult Travel Regulations Map provided and updated on a daily basis by IATA.
Import & export restrictions
A general overview of trade restrictions which were adopted by different countries during the COVID-19 pandemic is available on the International Trade Centre's COVID-19 Temporary Trade Measures webpage.
Economic recovery plan
For the general overview of the key economic policy responses to the COVID-19 pandemic (fiscal, monetary and macroeconomic) undertaken by the government of Indonesia, please consult the country's dedicated section in the IMF’s Policy Tracker platform.
Support plan for businesses
For an evaluation of impact of the Covid pandemic on SMEs and an inventory of country responses to foster SME resilience, refer to the OECD's SME Covid-19 Policy Responses document.
You can also consult the World Bank's Map of SME-Support Measures in Response to COVID-19.