The Macroeconomic Conditions of Indonesia

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The macroeconomic conditions of Indonesia are moderately challenging. The World Bank (2012) categories Indonesia as a lower middle income country. The CIA World Factbook (2012) notes that the country "still struggles with poverty and unemployment, inadequate infrastructure, corruption, a complex regulatory environment and unequal resource distribution among regions." Indonesia's GDP is $1.125 trillion per year (PPP), which places it as the 15th-largest economy among nations, behind Canada and ahead of Turkey (CIA World Factbook, 2012). Indonesia's GDP is growing steadily a strong rate. World Bank figures have the country's GDP growing at 6.46% in 2011, 6.2% in 2010 and only dipping below 5% growth once in the past five years, when GDP grew at 4.63% in 2009. Indonesia outperformed most of its regional peers (save China) in posting growth in 2009. There is a caveat to this growth in that the GDP per capita is growing at a slower pace than the GDP is growing. Indonesia's population is growing rapidly, and the country is becoming younger. In the long run, this will spur further growth, but in the short run the young population is actually constraining growth because so many Indonesians are still below working age. This comparison is relevant because population growth is a key driver of GDP growth, and looking at the GDP per capita growth helps to understand what component of GDP growth is driven by population increases as opposed to organic expansion. This growth has
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