Indonesia

Indonesia is Southeast Asia’s largest economy and ranks 16th globally. It is the world’s fourth most populous country and is made up of over 17,000 islands, with more than 300 ethnic groups.

Indonesia has achieved remarkable economic growth during last two decades and has achieved its middle-income status. With aspirations to reach high-income status by 2045, the Government of Indonesia aims to grow at the brisk annual rate of eight percent by 2029.

Indonesia has shown leadership in representing developing countries and has the capacity to work strategically with higher-income nations for a sustainable post-pandemic recovery and stronger growth amid global uncertainties.

Indonesia’s long-term development is guided by a 20-year plan (2025–45), carried out through a series of five-year medium-term plans known as RPJMN (Rencana Pembangunan Jangka Menengah Nasional)—each focusing on distinct priorities. The current five-year plan focuses on improving human capital, advancing digitalization, and increasing global competitiveness.

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Indonesia’s economy grew by 5 percent in the first half of 2025, supported by strong performance in agriculture, services, and net exports, according to the latest Indonesia Economic Prospects report. Annual growth is projected to remain steady, at 4.8 percent, through 2027, despite challenges from global policy uncertainty.

Indonesia made significant progress in reducing poverty between 1999 and 2019, cutting the rate by more than half, to below 10 percent just before the Covid-19 pandemic. As of March 2025, the official poverty rate stood at 8.5 percent, with about 23.9 million people living below the national poverty line—1.4 million fewer than in March 2024.

Indonesia’s labor force consists of about 143 million people, with participation rates of roughly 55 percent for womenand 83 percent for men. Most workers are engaged in the informal sector. The two most informal sectors in Indonesia are agriculture and services.

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The Bank’s works in Indonesia are aligned with the country’s development priorities focusing on five verticals: Prosperity, People, Infrastructure, Planet, and Digital.

In Prosperity, the World Bank is supporting to strengthen Indonesia’s tourism sector by improving infrastructure, boosting local economies, and attracting private investment, creating over one million jobs. The Bank also supports the country prepare for disasters and financial shocks through DRFI project and improve efficiency in local government spending via SINERGIS project.

Under People, the INEY program has helped Indonesia reduce stunting rates from 30.8% in 2018 to 19.8% in 2024 with multisector interventions to improve health and nutrition in the first 1,000 days of life.  The HSS project, the World Bank’s largest health investment (with AIIB, IsDB, and ADB), provides health facilities with vital equipment, training, and maintenance—ranging from advanced labs to the first ultrasound machines in many primary care facilities in Papua and West Papua. The Digital ID project is helping Indonesia build a secure digital ID app and modernize civil registration, making it easier for millions of Indonesians to access services and opportunities.

For Infrastructure, Indonesia’s first pumped storage hydropower plant in Java and Bali is supporting energy transition and decarbonization efforts. Further, the Indonesia Sustainable Least-cost Electrification projects (ISLE 1 and ISLE 2) have benefited over two million people in remote regions with new or improved electricity. The ILASP project improves spatial planning and land tenure security while the Mass Transit project is supporting Indonesia strengthen institutions for mass transit and enhancing urban mobility and accessibility in Medan and Bandung metropolitan areas.

Within the Planet focus area, the ICARE project supports Indonesia’s agriculture sector by promoting sustainable and inclusive value chains through an innovative bottom-up approach that empowers farmers and their organizations. It has already benefited more than 13,000 farmers across 13 agricultural commodities. The M4CR project has rehabilitated 13,000 hectares of mangroves, improving local livelihoods. The SIMURP project has upgraded over 270,000 hectares of irrigation, raising crop intensity by up to 216%. Combined with Climate Smart Agriculture pilots, these improvements have greatly increased agricultural productivity and helped more than 890,000 farming households.

Through analytic work such as the Indonesia Economic Prospects report, the Bank provides insights that inform policy makers to address development challenges.

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The World Bank is currently preparing a new Country Partnership Framework (CPF) for Indonesia . The latest CPF for the period of 2021-25 was launched In May 2021 following the completion of a Systematic Country Diagnostics (SCD) and broad consultations with the government, civil society, and the private sector. The CPF supports Indonesia’s development plan (the RPJMN) by helping the government promote inclusive, sustainable economic recovery from the pandemic and achieve long-term economic growth.

It focuses on four areas:

• Strengthening economic competitiveness and resilience
• Improving infrastructure
• Nurturing human capital
• Sustaining the management of natural assets, natural resources–based livelihoods, and disaster resilience.

Digitalization, gender, and climate were cross-cutting themes integrated into all activities under the CPF.

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• Asian Development Bank (ADB)
• Asian Infrastructure Investment Bank (AIIB)
• The Department of Foreign Affairs and Trade (DFAT)
• European Union (EU)
• The Islamic Development Bank (IsDB)
• State Secretariat for Economic Affairs (SECO)

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