Economy of Indonesia
Largest Southeast Asian economy, newly industrialised G20 member.
Indonesia has a mixed economy with dirigiste characteristics. It is one of the emerging market economies in the world and the largest in Southeast Asia. As an upper-middle income country and member of the G20, Indonesia is classified as a newly industrialised country. Indonesia has the 17th largest economy in the world by nominal GDP and the 7th largest in terms of GDP (PPP).
- type
- Mixed economy with dirigiste characteristics
- rank_nominal_gdp
- 17th largest in the world
- rank_ppp_gdp
- 7th largest in the world
- region
- Southeast Asia
- income_level
- Upper-middle income
- g20_member
- True
- internet_economy_2022
- US$77 billion
Lore & Background
In the years immediately following the proclamation of Indonesian independence, both the Japanese occupation and the conflict between Dutch and Republican forces had crippled the country's production, with exports of commodities such as rubber and oil being reduced to 12 and 5% of their pre-WW2 levels, respectively. The first Republican government-controlled bank, the Indonesian State Bank (Bank Negara Indonesia, BNI), was founded on 5 July 1946. During the guided democracy era in the 1960s, the economy deteriorated drastically as a result of political instability, with 1,000% annual inflation, shrinking export revenues, crumbling infrastructure, and negligible investment. Following President Sukarno's downfall, the New Order administration brought a degree of discipline to economic policy that quickly brought inflation down, stabilised the currency, rescheduled foreign debt, and attracted foreign aid and investment. However, high levels of economic growth masked structural weaknesses, including weak and corrupt governmental institutions, severe public indebtedness, and a culture of favours and corruption among politicians and the business elite. The government took custody of a significant portion of private sector assets through the acquisition of nonperforming bank loans and corporate assets, later sold for privatisation.
Reader's Guide
Indonesia's economy is significant as the largest in Southeast Asia and a member of the G20, classified as a newly industrialised country. Government price controls on basic goods like rice and electricity play a significant role, while micro, medium, and small companies contribute around 61.7% of the economy.
Frequently Asked Questions
Who is Economy of Indonesia?
Economy of Indonesia is a mixed economic system with strong state-guided (dirigiste) features that operates as the largest economy in Southeast Asia. It sits in the upper-middle income tier and is widely recognised as a newly industrialised emerging market.
What are Economy of Indonesia's powers/role?
As a G20 member, it holds a permanent seat among the world's most influential economic blocs. Its day-to-day role is that of a newly industrialised nation anchoring growth and trade across the entire Southeast Asian region.
How does Economy of Indonesia's story end?
Because it is a living, still-evolving system rather than a finished plot, there is no fixed ending. In its current arc it ranks as the 17th largest economy by nominal GDP and the 7th by purchasing-power-parity GDP worldwide.
Why is Economy of Indonesia important?
Its 7th-place standing by GDP (PPP) makes it one of the most consequential growth engines in the developing world. Being the biggest economy in Southeast Asia, it also sets the pace for regional trade, investment flows, and policy coordination.
What is Economy of Indonesia's origin/background?
It grew out of an agrarian base and, through decades of state-directed industrialisation, transformed into a newly industrialised mixed economy. The dirigiste strand reflects a long tradition of government steering key sectors alongside private-market activity.
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