Indonesian finance minister: economic growth reduces inequality

11:02 | 21/12/2016 Cooperation

Economic growth should help reduce inequality and poverty, and create a wider middle class, Indonesian Finance Minister Sri Mulyani Indrawati has stressed.

Illustrative image (Source: Inside Indonesia)

Over the past decade, Indonesia’s poverty rate has declined from 16 percent to 10 percent, but it created a wider rich-poor gap that was shown by increasing Gini Coefficient index from 0.38 in 2010 to 0.41 in 2016.

A high economic growth is not enough, but it should be qualified and inclusive, she said, adding that various policies and efforts to develop the economy should be able to create a growing middle-class as the key demand booster, amidst the current global economic uncertainty.

With economic growth predicted at 5.1 percent and inflation rate at 4 percent in 2017, the minister believed that the Indonesian economy would maintain its good performance.

However, economic growth which is dominated by domestic consumption should be equalised by investment to keep its fiscal balance.

She said consumption-driven economy will maintain domestic purchasing power, and the middle class will play a bigger role. It should be supported by policy on taxation and wages, to encourage productivity and income.

Private investment should be encouraged on the back of favorable economic packages, which furthermore, could absorb local workers, she added.

Theo VNA