First of all, there is positive news. One might remember that Indonesia had turned into an ‘upper middle income country’ (leaving behind the status of ‘lower middle income country’ status) just before the COVID-19 crisis erupted. However, this crisis caused a recession that directly pushed Indonesia back into a lower middle income economy in 2020.

In the June 2023 edition of its Indonesia Economic Prospects report, the World Bank noted that Indonesia – after its economic rebound – is now back in the upper middle income country category with gross national income (GNI) per capita at USD $4,580 in 2022, up 9.8 percent from USD $4,170 in the preceding year. Table 2 below shows that a GNI above USD $4,465 puts a country into the upper middle income country category.

Indonesian Finance Minister Sri Mulyani Indrawati responded to the news saying it is a good development from the perspective of investment, both in terms of financial markets and foreign direct investment (FDI), as this upgrade shows that Indonesia is a maturing economy that offers stable growth to investors.

While we are on the subject of the World Bank, it is also interesting to take a look at some of this Washington-based institution’s conclusions on the topic of the economy of Indonesia (expressed in the June 2023 Indonesia Economic Prospects report):

  • Commodity windfalls and private consumption have sustained Indonesia’s growth despite a difficult global environment, but signs of normalizing domestic demand are emerging. This includes a softening in imports and investment growth, a deceleration in private sector credit growth, as well as a slowdown in core inflation since the beginning of the year;

  • Indonesian inflation is easing faster than anticipated. The slowing pace of inflation is attributed to the combination of external and domestic policy-related factors. This includes the decline in global oil prices, improved harvests, government intervention at sub-regional level to ease supply bottlenecks (notably for food and rice), and the appreciation of the rupiah which lowered the cost of imports;
  • Indonesia’s external vulnerabilities remain moderate. The widening current account surplus in early 2023 is linked primarily to weakening imports of goods instead of rising exports. Exports have in fact decelerated sharply as prices of major export commodities like coal, palm oil, and other metals dropped, while manufacturing exports’ contribution remains limited.


This is the introduction of the article. The full article can be accessed in our July 2023 report (an electronic report). This report can be ordered by sending an email to or a message to +62.882.9875.1125 (including WhatsApp).

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