Indonesia represents the third largest tropical rainforest in the world (94.1 million hectares), and is home to the world’s largest tropical peatlands (14.9 million hectares) and mangrove forests (3.31 million hectares). These natural resources store vast amounts of carbon that mitigate climate change impacts, crucial to sustain the livelihood of Indonesians and support the country’s long term. In Indonesia, climate change is likely to impact water availability, health and nutrition, disaster risk management, and urban development – particularly in coastal zones, with implications to poverty and inequality. The World Bank is supporting Indonesia’s COVID-19 emergency response, including strengthening elements of emergency response to the pandemic, enhancements to social assistance and health care systems, and actions to strengthen the resilience of the financial sector. The additional spending is to improve patient treatment and expand food assistance, cash transfers, and wage subsidies. To respond to the surge in COVID-19 cases in June - July 2021, the government increased the COVID-19 fiscal package from 4.2 to 4.5 percent of the country’s GDP between March 2020 to July 2021, through budget reallocations. The World Bank's Human Capital Index revealed that the loss of learning caused by the closing down of schools during the COVID-19 pandemic will have repercussions for Indonesia's next generation. However, more work remains to be done to ensure strong and productive human capital development. Indonesia achieved a notable success in reducing its stunting rate from 37 percent in 2013 to under 28 percent in 2019. With its economy impacted by the pandemic, Indonesia went from upper-middle income to lower-middle income status as of July 2021.The pandemic also curtailed Indonesia’s achievement in reducing its poverty rate, from the record-low of 9.2 percent in September 2019 to 10.4 percent as of March 2021. Additionally, the global crisis caused by the COVID-19 pandemic has created unprecedented hurdles for Indonesia’s development goals. However, Indonesia still faces considerable development challenges. It aims to further strengthen Indonesia’s economy by improving the country’s human capital and competitiveness in the global market.
The current medium-term development plan is the last phase of the long-term plan. It is segmented into 5-year medium-term development plans called the RPJMN ( Rencana Pembangunan Jangka Menengah Nasional), each with different development priorities. Indonesia’s economic planning follows a 20-year development plan, spanning from 2005 to 2025. Furthermore, Indonesia has made enormous gains in poverty reduction, cutting the poverty rate by more than half since 1999, to just under 10 percent in 2020. Today, Indonesia is the world’s fourth most populous nation, the world’s 10th largest economy in terms of purchasing power parity, and a member of the G-20.
The largest economy in Southeast Asia, Indonesia – a diverse archipelago nation of more than 300 ethnic groups – has charted impressive economic growth since overcoming the Asian financial crisis of the late 1990s.