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Today's Headlines Demography
On 21 January 2021, Statistics Indonesia (Badan Pusat Statistik, or BPS) released its long-awaited ‘Population Census 2020’. This study gives us various crucial data on the Indonesian population, including population size, age structure, and birth rate.
Indonesia is known for having a young (and big) population. Around half of the population is below 30 years of age. Indonesia's median age was estimated at 28.6 years in 2016. This means that one half of the population is older than 28.6 years, while the other half is younger than this figure. A new study confirms that Indonesia has one of the world's most productive (in theory that is) populations.
Indonesia is currently blessed with a demographic bonus as around half of the population is below thirty years of age. Meanwhile, Indonesia's National Population and Family Planning Board (BKKBN) once stated that the number of Indonesians within the productive age group will be higher than the number of elderly people and children in the years 2025-2035. However, based on the latest research conducted by the World Bank, Indonesia will need to start preparations to deal with an ageing population.
Investors in Asian markets should not be overly concerned about slowing economic growth in China or bullish US dollar momentum ahead of higher US interest rates as economic growth rates in this region are still significantly higher than in other parts of the world. Thanks to a burgeoning middle class segment (which constitutes a strong consumer force), Asia has great prospects for the long-term. This is the message conveyed in the words of Christophe Palumbo, Senior Business Development Manager at Aberdeen Asset Management.
The Organization for Economic Co-operation and Development (OECD), an intergovernmental organization that works with governments to understand what drives economic, social and environmental change, is positive about the economic prospects of Indonesia. However, the institution also emphasized that Indonesia needs to do its homework in order to benefit optimally from the country’s demographic bonus and to join the ranks of the upper-middle-income countries.
Amid slowing economic growth, Indonesia’s unemployment rate increased slightly in August 2014. On Wednesday (05/11), Statistics Indonesia announced that 7.24 million Indonesians, or 5.94 percent of the country’s labour force, were without a job. In the previous unemployment report (covering conditions in the month February 2014), Indonesia’s unemployment rate stood at 5.70 percent of the country’s labour force (about 7.15 million Indonesians). The government agency releases Indonesia’s unemployment data twice per year.
According to data from Indonesia’s Ministry of Public Works there were 34.3 million Indonesians living in slums in August 2014. Public Works Minister Djoko Kirmanto stated that he wants the involvement of the Ministry of Housing, the National Development Planning Ministry (Bappenas), and the Ministry of Environment to resolve this issue. Currently, around 11.3 percent of the Indonesian population is poor. Head of Bappenas, Armida Alisjahbana, earlier stated to target to ease Indonesia’s poverty rate to 9-10 percent by 2015.
Often the lack of quality and quantity of infrastructure in Indonesia has been cited as a reason for limited economic growth. Lack of adequate infrastructure causes the country's logistics costs to rise steeply, thus reducing competitiveness and attractiveness of the investment climate. Also in the country’s natural resources sector Indonesia’s infrastructure problems hamper development. For instance, the lack of quality irrigation to supply ample quantities of water to rice basins causes rice production to be far from optimal.
The Governor of Indonesia’s central bank (Bank Indonesia), Agus Martowardojo, said that the Indonesian economy can grow more than six percent provided that several important structural reforms will be implemented in order to avoid the middle income trap. This trap occurs when rapidly growing economies stagnate at middle-income levels for many years, thereby failing to reach a high income level (as has been the case with Brazil, Mexico, South Africa and other middle income countries from the early 1980s to the mid-2000s).
The Institute of Demographic Studies released a report which claims that by the year 2050, the world population will increase to 9.7 billion from the current number of 7.1 billion. India is expected to become the most populous country, surpassing China. At the end of this century the number of people on earth will amount to around 10 or 11 billion. A report of the United Nations, released in June, suggests that by 2050 the total number of people that is 60 years of age or older will amount to two billion (from 841 million currently).
Latest Columns Demography
Based on the latest report of the International Monetary Fund (IMF) we conclude that Asia has great economic prospects for the next decade to come. However, aging populations and sluggish productivity - the reversal of the so-called "demographic dividend" - are threats that are expected to undermine the region's economic growth in the long run. We draw these conclusions from the Asia-Pacific Regional Economic Outlook 2017, a report released by the IMF on Tuesday (09/05). Indonesia, however, falls in the "safe category" due to its young population.
Although infrastructure development across the Indonesian nation is center of attention in the media, President Joko Widodo will not neglect the family planning program. Instead he seeks to revive the nation's family planning program. An effective family planning program is one of the key strategies to boost future economic growth because a low population growth rate translates into a higher per capita gross domestic product, which translates into higher incomes, higher savings, higher investment and implies a decline in overall poverty.
The Indonesian economy, from the expenditure side, is highly dominated by domestic demand. From Q1-2010 to Q1-2015, the average role of domestic demand reached 99.5 percent, with the lowest level at 96.8 percent. The positive side of this situation is that the Indonesian economy is relatively resilient to external factors. History shows that despite the US subprime mortgage crisis and financial crisis in Europe, economic growth in Indonesia remained relatively high and consistent compared to other countries.
A new World Bank report, entitled “The Double Burden of Malnutrition in Indonesia”, says that 37.2 percent of Indonesian children under the age of five - or 8.4 million children - are stunted (meaning excessively small for their age) and suffer from chronic malnutrition. As such, Indonesia has the fifth-highest level of stunting in the world. The report also states that 19.6 percent of Indonesian children under five years old (approximately 4.4 million) are underweight as a result of malnutrition. Public awareness about this issue is low in Indonesia.
High youth unemployment is one of the threats that is being faced by Indonesia. Indonesia has a young population as roughly half of the total population is below thirty years of age. This means that the country contains a potentially large workforce. But this demographic bonus can turn into a demographic disaster if this workforce cannot be absorbed by employment opportunities. The World Bank recently warned against Indonesia's high youth unemployment and misplaced focus on education spending.
Over a decade ago, economist Jim O'Neill became famous for the introduction of the term BRIC (indicating the promising economic perspectives of Brazil, Russia, India and China). Now the BRICs have lost some of its significance, he has turned to a new acronym: MINT. These MINT countries - consisting of Mexico, Indonesia, Nigeria and Turkey - share a number of features that make them potential giant economies in the future: promising demographic structure, strategic geographical location, and commodity-rich soil.
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