World Bank issues the report on Indonesia’s investment-led growth

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An investment-led economic expansion has kept Indonesia`s economy growing at a solid pace, reaching 5.1 percent in the first quarter of 2018, according to the World Bank`s June 2018 Indonesia Economic Quarterly.

“Indonesia`s sound macro-economic fundamentals continue to provide a solid buffer against rising global volatilities,” World Bank Country Director for Indonesia and Timor-Leste, Rodrigo A. Chaves, said in a statement here on Monday.


Read more from the World Bank report Indonesia 2018: A bright future for Indonesian economy


Chaves remarked that sound economic management has kept inflation in check and debt levels at about only half of the legal threshold.

Looking forward, however, Indonesia`s progress will depend on crucial structural policies such as those seeking to provide the population with the right skills for the future.

High global commodity prices have spurred higher investment, especially in machine, equipment, and vehicles, leading to fastest growth in gross fixed capital formation in more than five years.

The outlook for Indonesia?s economy continues to be positive for the rest of the year, with GDP growth projected to reach 5.2 percent in 2018 on stronger domestic demand.

Risks to this outlook include continued volatility in global financial markets and disruptions to international trade.

This latest edition of the Indonesia Economic Quarterly takes a closer look at 15 years of education reforms and assesses their impact in improving education outcomes and human capital in Indonesia, and the challenges that remain.

While schooling attainment has grown significantly, student learning remains below the levels of other countries in the region, compromising Indonesia’s competitiveness in the global economy, according to the report.

“More educational reforms are needed urgently to significantly enhance the quality of learning among students. With a large number of teachers retiring in the next decade, there will be a crucial opportunity to upgrade Indonesia`s teaching force,” Lead Economist for the World Bank Indonesia, Frederico Gil Sander, remarked.


Graduates of secondary and tertiary education will have the necessary skills to find jobs in a changing labor market only through sustained efforts to improve the quality of learning outcomes.

Key recommendations for further education reforms include defining and enforcing teacher qualifications; complementing existing education financing mechanisms with a targeted, performance-based transfer for lagging schools and districts; and launching a national campaign to generate public pressure to improve student learning.

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