The Economy

In terms of the economic context: did you know that Indonesia is classified as a lower-middle-income country?

So what does that actually mean?

The categorization “lower-middle-income country” is made by the Organization for Cooperation and Development (OECD) and it means that these countries have a gross national income per person between 1,036 and 4,085 dollar. However, the country continues to grow economically despite its status as a lower-middle income country.

Indonesia is the largest economy in Southeast Asia, but since 2012 the economic growth slowed down. This is due to the fact that the export boom  of the commodities had come to an end. Did you know that during the global financial crisis, Indonesia together with India and China were the only G20 members that were still growing? Furthermore, the Government of Indonesia managed to lower its debt-to-GDP ratio from 100% in 1999 (which was shortly after the financial crisis of Asia) to less than 25% today.
Do you know what the agriculture products of Indonesia are? No? Let’s list them…
  • tapping latex from the rubber treeRubber and similar products
  • Palm oil
  • Poultry
  • Beef
  • Forest products
  • Shrimp
  • Cocoa
  • Coffee
  • Medicinal herbs
  • Essential oil
  • Fish and its similar products
  • Spices

What about the industry products? Very varied: petroleum and natural gas, textiles, automotive, electrical appliances, apparel, plywood, handicrafts, footwear, rubber, cement, mining, medical instruments and appliances, chemical fertilizers, processed food, jewelry and not to mention tourism! And indeed, Indonesia is worth traveling to  ; )


So how is Indonesia now doing financially?

Poverty and unemployment is still a big issue in Indonesia and affects a big population of people, however, it has been greatly reduced over the last few decades. About 32 million people still live in poverty and about half of all households still remain around the national poverty line of about US$22 a month. So where precisely live the highest percentages of poor people in Indonesia? Papua Island had the highest percentage of poor population in 2013. And in Java Island, the province with the highest percentage of poor population (15 – 20%) was DI Yogyakarta in 2013. The map below gives a good overview.


However, it’s important to point out that  the depth and severity levels of poverty differs. And if we take  malnutrition into account, than we know that malnutrition undermines economic growth. Furthermore, it perpetuates poverty! People who are malnourished are more prone to develop diseases, but are also weak to fully participate in the “working life”. Hence, their income will reduce, which drives them even more in poverty. Not to mention, this also means less income to feed the children in poor households. Therefore,  it was one of the most important constraints to achieving many of the Millennium Development Goals (MDGs). So what does this mean if we look at inequalities? And what is the perception of the Indonesians themselves? Look at the video below to find out.

Employment rates have also increased and have contributed to fall in poverty rates. Other factors that remain a challenge are corruption, an inadequate infrastructure, and unequal distribution of resources between regions and a regulatory environment which is quite complex. The good news is that the subsidies for fuels is reduced significantly since 2015, which resulted in the Government redirecting its spending to development priorities.

So what about the health expenditures? Most important thing to know in our case. Well, only 3.0% of GDP in Indonesia  was spend on health in 2012. This was three times less than the OECD average of 9.3%. Furthermore, if we look at the health expenditure per capita, Indonesia ranks well below the OECD average (USD 3484), spending of only USD 150 in 2012.  However, we do know that health spending tends to rise with incomes and that in general countries with higher GDP per capita also tend to spend more on health. So in this case is not that surprising that Indonesia is still lacking behind compared with the high income countries. Do you want to see this comparison? Look at the figure below!


Did you know that the main source of health funding in nearly all OECD countries is the public sector? This again was lower in Indonesia, where 40% of health spending was funded by public sources in 2012.

In 2014 the total expenditure on health was 2.9 % of GDP. And the total expenditure on health per capita 299 (Intl $).

Written by: Jessica

Sources: [internet]. The World Factbook. East & Southeast Asia: Indonesia. Retrieved 15 November. Retrieved from:

Skolnik, R (2016). Global Health 101 (3rd edition). Burlington: Jones & Barlett learning.

OECD Health Statistics 2014 How does Indonesia compare? OECD. Retrieved 15 November. Retrieved from: [internet]. Countries. Indonesia. World Health Organization. Geneva. Zwitserland.[c 2016] Retrieved 15 November. Retrieved from:

Asian Development Bank (ADB). Social Protection Project Briefs. Investing in Children in Indonesia:  A Step Toward Poverty Reduction. Retrieved 16 November. Retrieved from:


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