President of Indonesia, Susilo Bambang Yudhoyono, mentioned in his speech ahead of the Independence Day that Indonesia's per capita GDP is expected to rise to USD $5,000 by 2014. An increasing per capita GDP triggers domestic consumption among Indonesia's rapidly expanding middle class segment and thus forms a catalyst for economic activity in the country. As can be seen in the table below, Indonesia's per capita GDP grew steadily between 2006 and 2012. In 2010, it hit the important level of USD $3,000.
(in billion USD)
(annual percent change)
|GDP per Capita
¹ indicates a future projection
Sources: World Bank and International Monetary Fund (IMF)
Surpassing the per capita GDP level of USD $3,000 is an important step as economists believe that it will result in accelerated development. It provides a significant boost to various sectors as demand increases. Examples of such sectors are the automobile industry, property, retail, durable goods (televisions, refrigerators or air conditioners) and tourism.
GDP per capita has currently reached its highest level in Indonesian economic history and is forecast to grow higher. However, one can question whether per capita GDP is an appropriate measurement for Indonesia as Indonesian society is characterized by a high degree of inequality with regard to income distribution. In other words, there exists a gap between statistics and reality as the wealth of the 43,000 richest Indonesians (who represent only 0.02 percent of the total Indonesian population) is equivalent to 25 percent of Indonesia's GDP. The 40 richest Indonesians account for 10.3 percent of GDP (which is the same amount as the combined wealth of the 60 million poorest Indonesians). These numbers indicate a huge concentration of wealth within the small elite. Moreover, this income distribution gap is estimated to widen in the foreseeable future.