OECD Economic Surveys 
                Indonesia   
                March 2021 
                OVERVIEW 
                                                              
          http://www.oecd.org/economy/indonesia-economic-snapshot/ 
                                    
                                                             
          
         This Overview is extracted from the 2021  Economic  Survey of  Indonesia. The Survey is 
         published under the responsibility of the Secretary-General of the OECD. The Survey was 
         discussed at a meeting of the Economic and Development Review Committee on 25 January 
         2021.  
          
          
          
          
          
          
          
          
          
          
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         OECD Economic Surveys: Indonesia© OECD 2021 
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               Table of contents 
               Executive summary                                                                                     8 
               1 Key policy insights                                                                               13 
                   Indonesia is confronting the most severe challenges since the 1997 crisis                        13 
                   Macroeconomic policy action has been stepped up in the face of the pandemic                      19 
                   Indonesia could gain more from globalisation                                                     31 
                   The fruits of growth should be shared                                                            38 
                   Regulatory barriers are high and State-owned enterprises ought to lead by example                42 
                   A greener post-COVID-19 Indonesia?                                                               48 
                   Ambitious reforms are needed to sustain improvements in living standards                         52 
                   References                                                                                       56 
                   Annex 1.A. Evolution of budgetary allocations since 2019                                         61 
                
               FIGURES 
               Figure 1. A sudden stop to a growth story                                                             9 
               Figure 2. Poverty is on the rise again                                                               10 
               Figure 1.1. The pandemic interrupted a long spell of sustained growth                                13 
               Figure 1.2. Income and productivity convergence started decelerating around 2014                     14 
               Figure 1.3. Consumer price inflation is low                                                          17 
               Figure 1.4. A number of macroeconomic vulnerabilities have resurfaced                                19 
               Figure 1.5. The sovereign risk premium has decreased since March 2020 but remains high               20 
               Figure 1.6. Debt will rise in the aftermath of COVID-19, but remain sustainable                      21 
               Figure 1.7. The financial sector is profitable and the authorities consider it well capitalised      22 
               Figure 1.8. Credit growth to the real sector has weakened from very high levels                      23 
               Figure 1.9. Fiscal and current account deficits                                                      25 
               Figure 1.10. Composition of budgeted public spending                                                 27 
               Figure 1.11. Tax revenue is low by OECD and G20 standards                                            28 
               Figure 1.12. Composition of tax revenue                                                              28 
               Figure 1.13. Export performance has been rather modest                                               32 
               Figure 1.14. Northeast Asia is Indonesia’s main trading partner                                      33 
               Figure 1.15. Mobility restrictions are hitting tourism hard                                          34 
               Figure 1.16. Pervasive statutory restrictions discourage foreign direct investment                   38 
               Figure 1.17. Poverty and income inequality remain high                                               40 
               Figure 1.18. Regional disparities are high with pockets of deep poverty in the poorest provinces     41 
               Figure 1.19. Indonesia has very strict regulations on product markets                                43 
               Figure 1.20. Indonesia's regulatory barriers to competition are very high                            43 
               Figure 1.21. Corruption is still perceived as high                                                   47 
               Figure 1.22. The transition to a greener economy could be quicker                                    49 
                
               OECD ECONOMIC SURVEYS: INDONESIA 2021 © OECD 2021 
                                                                                                                           
                 4    
                 TABLES 
                 Table 1. The economy suffered a contraction                                                                       9 
                 Table 1.1. Macroeconomic indicators and projections                                                              18 
                 Table 1.2. Events that could lead to major changes in the outlook                                                18 
                 Table 1.3. Main economic stimulus measures in 2020                                                               26 
                 Table 1.4. Past recommendations related to raising revenue                                                       30 
                 Table 1.5. Past recommendations related to tourism                                                               35 
                 Table 1.6. Past recommendations regarding SOEs                                                                   45 
                 Table 1.7. Structural reforms to close gaps can yield large long-term gains                                      53 
                 Table 1.8. The fiscal cost of reforms is modest                                                                  53 
                  
                 Annex Table 1. Budget comparison, 2019-2021 (IDR trillions)                                                      61 
                  
                  
                  
                                                       
                                                                            OECD ECONOMIC SURVEYS: INDONESIA 2021 © OECD 2021