Indonesia Categorized as Lower Middle-Income Country: World Bank

JAKARTA, KOMPAS.com - Indonesia is now classified by the World Bank as a lower-middle income country, a downgrade from its previous category as one of the upper-middle income countries based on gross national income (GNI) per capita in 2020.

In the report, which is updated every July 1, Indonesia's per capita income last year reached $3,870, or down 4.44 percent from $4,050 in 2019.

In response to this, the Ministry of Finance said that the decline in Indonesia's per capita income was impacted by the Covid-19 pandemic.

Head of the Fiscal Policy Agency at the Ministry of Finance, Febrio Kacaribu, said that the Covid-19 pandemic was a big challenge and had a profound impact on social life and global economic activity.

Also read: World Bank Raises Indonesia’s Status to Upper-Middle-Income Nation

"The pandemic has created negative economic growth in almost all countries, including Indonesia, in 2020. Thus, the decline in Indonesia's per capita income is an unavoidable consequence," Febrio said in a statement, Thursday, July 8.

Febrio explained Indonesia's economic growth contracted by 2.1 percent in 2020. However, the realization was much better than other G-20 economies and ASEAN members states.

Citing examples, in 2020 India's growth contracted 8.0 percent, South Africa's economy contracted by 7.0 percent, while the Philippines and Malaysia contracted by 9.5 percent and 5.6 percent, respectively. 

Only a few countries still grew positively last year. China's economy stood at 2.3 percent, Turkey at 1.8 percent, and Vietnam at 2.9 percent.

He said prior to the pandemic, Indonesia was in a strong trend in economic growth and prosperity. This is driven by hard work in carrying out development to obtain relatively high economic growth consistently averaging 5.4 percent in the last few years.