Indonesia Growth and Jobs Report Running Faster, for Longer: Structural Transformation, Productivity, and Good Jobs

Indonesia has made remarkable progress and is now an upper-middle-income economy since 2023. It rose from the world's 29th largest economy in 1968 to the 16th in 2024. Economic growth delivered jobs and poverty reduction. From 2000 to 2024, unemployment fell from 9 to 5 percent, and poverty fell from 19 to 9 percent. But to reach high-income status by 2045, growth must become more productive and job-rich.

The "Indonesia Growth & Jobs" report diagnoses current constraints-market power, regulatory barriers, and limited diffusion of know-how-that slow productivity and keep too many workers in lower-value activities. It proposes a jobs-centered growth strategy that reinforces macro fundamentals, strengthens competition, opens trade and investment, deepens finance, and addresses skills gaps.

The Report's reform simulations show sizable gains in GDP, real wages, and the creation of millions of better-quality jobs. The agenda aims to mobilize private capital, spur innovation, and expand the middle class-so Indonesia can run faster, for longer.

Key messages

• Indonesia's growth record is strong, but momentum has slowed around 5%-below what's needed to meet the 2045 high-income goal.
• Job creation is skewed toward lower-value activities; too few middle-class, higher-productivity jobs are emerging.
• Market power and regulatory barriers are dampening competition and innovation, lowering productivity growth.
• Non-tariff barriers and services restrictions raise costs and limit the diffusion of know-how.
• A three-pillar strategy-stronger fundamentals, pro-competition business rules, and mobilizing private capital-can unlock growth.
• Targeted reforms in competition, trade, finance, and skills can raise GDP and real wages while creating millions of better jobs.

Why does job-centered growth matters?

Indonesia's growth has stabilized near 5 percent-below what's needed to meet the 2045 high-income goal. Job creation is concentrated in lower-value sectors, while higher-productivity, middle-class jobs are expanding too slowly. A sharper focus on competition, openness, and investment is critical to lift productivity and earnings across the economy.

What's new in the report?

• A market-structure lens on growth: how concentration, state participation, and regulatory discretion affect productivity and job quality.
• Clear reform payoffs: macro-structural and CGE modeling quantify impacts on GDP, wages, and employment.
• A practical, three-pillar agenda linking fundamentals, pro-competition rules, and private capital mobilization.

Three-Pillar Agenda:

Indonesia's growth has been impressive, but moving to the next stage will require renewed reform momentum. The Indonesia Growth and Jobs Report identifies three pillars:

Pillar 1 - Foundational infrastructure: Indonesia has made strong progress in this foundational domain, Driven by investments in human capital and physical infrastructure, alongside improved public sector governance and macroeconomic management.

Pillar 2 - Business-enabling policies: To sustain gains and revive productivity, the CGJR calls for a more predictable business regulatory environment, stronger competition, streamlined firm entry and exit, and fewer trade restrictions.

Pillar 3 - Mobilizing private capital: Business enabling policies should attract higher-value investment, supported by deeper private financing. Expanding credit reporting, enabling fintech, and scaling up guarantees can lower borrowing costs and broaden access to finance for high-value sectors.