Indonesia’s Economic Growth Trend in the Last 20 Years

For the past two decades, the Indonesian economy has experienced a slowing growth trend. Although it has recorded high economic growth in several periods in the past, Indonesia’s economic growth is now in a lower range compared to previous decades.

In several periods in the past, Indonesia recorded impressive economic growth. In 1968, Indonesia recorded economic growth of 10.92%. This growth was largely driven by political stability after the Old Order and the implementation of economic policies that supported development.

Indonesia’s economic growth in 1980 reached 10.00%, driven by the surge in world oil prices that benefited oil-exporting countries, including Indonesia. In 1995, Indonesia’s economic growth reached 8.22%. This growth was driven by increased foreign investment and economic liberalization that began in the late 1980s.

Indonesia’s average economic growth in the period 1986 to 1990 was 6.28%. Political and economic stability as well as deregulation and debureaucratization policies implemented during this period contributed to strong economic growth.

Indonesia’s average economic growth from 1990 to 1997 increased to 6.91%. This period was marked by increased foreign investment and exports as well as significant infrastructure development. However, this period also ended with the Asian economic crisis which had a major impact on Indonesia.

From 2000 to 2023, Indonesia’s average economic growth slowed to 4.88%. Despite efforts to recover from the Asian economic crisis and various reform policies, economic growth remains lower than the previous period.

Several major factors that have caused the slowdown in Indonesia’s economic growth in the last two decades include dependence on the commodity sector, lack of economic diversification, lack of infrastructure and complex bureaucracy.

To overcome the slowdown in economic growth and achieve higher growth, Indonesia needs to take several strategic steps such as increasing investment and infrastructure, bureaucratic reform and improving human resources.

With the right efforts and strong commitment from all parties, Indonesia has the potential to return to achieving high and sustainable economic growth and realize the vision of becoming a high-income country by 2045.

Source : Bappenas