Indonesia experienced its first recession in over two decades in 2020, although large-scale fiscal stimulus and monetary support limited its depth and impact. The approval of an ambitious package of structural reforms, covering labour laws, taxes and ease of doing business, testifies of the authorities’ commitment to attract high-quality investment that will enhance wealth and well-being. This is key at a time when Indonesia embarks in trade and investment liberalisation through the Regional Comprehensive Economic Partnership with East Asia and Oceania partners, with new opportunities and challenges. Nevertheless, the pandemic leaves behind strong headwinds. The COVID-19 impact compounds pre-existing challenges, notably a very high incidence of informality and relatively low levels of skills. Uncertainty surrounds the vaccination roll-out and the resumption of a normal life, especially for children who have been deprived of school for an unprecedentedly-long period. The crisis will have a lasting effect on some vulnerable socio-economic sectors and therefore requires improvements in the delivery of social services.
SPECIAL FEATURE: SKILLS
OECD's periodic reviews of Indonesia's economy. Each review examines recent economic developments, policies and prospects, and presents a series of recommendations.