Indonesia 10th largest economy globally: World Bank

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Indonesia-economyIndonesia has the 10th largest economy in the world with the country contributing 2.3 per cent of global economic output; according to a recent report by the World Bank:

The report is based on the findings of the 2011 International Comparison Program (ICP), which assesses economies based on purchasing power parity (PPP) and noted that Indonesia moved up six places and leapfrogged more developed countries such as Spain, South Korea and Canada.

The ICP round gathered over 7 million prices from 199 economies in eight regions, with assistance from 15 regional and international partners. In the top nine are the US, China, India, Japan, Germany, Russia, Brazil, France and the United Kingdom.

The middle-income economies of Indonesia, China, India, Russia, Brazil and Mexico now account for 32.3 per cent of world gross domestic product. That compares with the 32.9 per cent contributed by the six largest high-income economies, US, Japan, Germany, France, United Kingdom, and Italy. The report also showed that the US was about to lose its status as the world’s biggest economy, as China is likely to surpass it by the end of this year, faster than widely anticipated.

The US has been the biggest economy in the world since overtaking the United Kingdom in 1872.

The Organisation for Economic Cooperation and Development (OECD) has predicted that China will overtake the US by 2016 while China itself is hoping to become number one by 2019. According to the report, China’s GDP was nearly 87 per cent of the US GDP in 2011, while India had moved up from being in 10th position in 2005 to the third-largest economy, overtaking Japan.

However, some say the PPP is just one measure to judge the performance of the world’s economies and that developing nations like India and China still have a lot of catching up to do.

“When, for example, we measure international purchasing power expressed in dollars, which matters in international trade, the US, Europe and Japan continue to be the dominant economies in the world,” Frederic Neumann, co-head of Asia economic research at HSBC in Hong Kong told CNBC.

President Susilo Bambang Yudhoyono was quick to respond. “This morning I received a report that Indonesia has become the world’s 10th largest economy. Thank God, it is all of our efforts and hard work,” he said through his twitter account. He added that the nation continues working to reach higher levels of prosperity.

“This is of course a good start. But we still have a long way to go as we are facing many challenges. However, God willing, we can overcome those challenges,” he told a gathering in Jakarta later in the day.

Finance Minister Chatib Basri said the achievement was an endorsement of the government’s economic policy.

“That means Indonesia’s economy is on the right track and we have made significant progress because a couple years ago we were in 16th position,” Chatib said.

But many other reports pointed out that while the rise of Indonesia should be praised, it has an uneven growth rate, with a widening gap between rich and poor. Citing a forthcoming report by the World Bank, the Economist warned that real consumption grew by about 4 per cent a year on average from 2003 to 2010. But for the poorest 40 per cent of households it grew by only 1.3 per cent. In contrast, consumption by the richest 20 per cent grew by 5.9 per cent.

The growing inequality between low-income groups and high-income groups has also been indicated by the country’s worsening Gini coefficient — which represents income disbursement — from 0.29 in 2000 to 0.38 in 2011, a drop of almost a third in equality.

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Reading Time: 3 minutes

Indonesia has the 10th largest economy in the world with the country contributing 2.3 per cent of global economic output; according to a recent report by the World Bank:

Reading Time: 3 minutes

Indonesia-economyIndonesia has the 10th largest economy in the world with the country contributing 2.3 per cent of global economic output; according to a recent report by the World Bank:

The report is based on the findings of the 2011 International Comparison Program (ICP), which assesses economies based on purchasing power parity (PPP) and noted that Indonesia moved up six places and leapfrogged more developed countries such as Spain, South Korea and Canada.

The ICP round gathered over 7 million prices from 199 economies in eight regions, with assistance from 15 regional and international partners. In the top nine are the US, China, India, Japan, Germany, Russia, Brazil, France and the United Kingdom.

The middle-income economies of Indonesia, China, India, Russia, Brazil and Mexico now account for 32.3 per cent of world gross domestic product. That compares with the 32.9 per cent contributed by the six largest high-income economies, US, Japan, Germany, France, United Kingdom, and Italy. The report also showed that the US was about to lose its status as the world’s biggest economy, as China is likely to surpass it by the end of this year, faster than widely anticipated.

The US has been the biggest economy in the world since overtaking the United Kingdom in 1872.

The Organisation for Economic Cooperation and Development (OECD) has predicted that China will overtake the US by 2016 while China itself is hoping to become number one by 2019. According to the report, China’s GDP was nearly 87 per cent of the US GDP in 2011, while India had moved up from being in 10th position in 2005 to the third-largest economy, overtaking Japan.

However, some say the PPP is just one measure to judge the performance of the world’s economies and that developing nations like India and China still have a lot of catching up to do.

“When, for example, we measure international purchasing power expressed in dollars, which matters in international trade, the US, Europe and Japan continue to be the dominant economies in the world,” Frederic Neumann, co-head of Asia economic research at HSBC in Hong Kong told CNBC.

President Susilo Bambang Yudhoyono was quick to respond. “This morning I received a report that Indonesia has become the world’s 10th largest economy. Thank God, it is all of our efforts and hard work,” he said through his twitter account. He added that the nation continues working to reach higher levels of prosperity.

“This is of course a good start. But we still have a long way to go as we are facing many challenges. However, God willing, we can overcome those challenges,” he told a gathering in Jakarta later in the day.

Finance Minister Chatib Basri said the achievement was an endorsement of the government’s economic policy.

“That means Indonesia’s economy is on the right track and we have made significant progress because a couple years ago we were in 16th position,” Chatib said.

But many other reports pointed out that while the rise of Indonesia should be praised, it has an uneven growth rate, with a widening gap between rich and poor. Citing a forthcoming report by the World Bank, the Economist warned that real consumption grew by about 4 per cent a year on average from 2003 to 2010. But for the poorest 40 per cent of households it grew by only 1.3 per cent. In contrast, consumption by the richest 20 per cent grew by 5.9 per cent.

The growing inequality between low-income groups and high-income groups has also been indicated by the country’s worsening Gini coefficient — which represents income disbursement — from 0.29 in 2000 to 0.38 in 2011, a drop of almost a third in equality.

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