Urbanization and Inflation Rates in Indonesia


   Urbanization and Inflation Rates in Indonesia

   Investopedia defines a country’s Growth Domestic Product (GDP) as “the monetary value of all the finished goods and services produced within a country’s border during a time period”. It is usually calculated on an annual basis. In Indonesia, this number as it relates to agriculture there has only declined about 1% since 2010. According to World Bank, in that year the percentage was 15.3, and it dropped by .6 by 2011. For the next two years, the number stayed about midways between 14% and 15%.

   As of 2010, the poverty headcount ratio in Indonesia was 46% of the population. This number reached one of its highest amounts in the last 30 years during the late 1980’s, skyrocketing to 91% in 1987. When it comes to the subject of inequality in the country of islands, the situation seems to steadily be getting worse. As of September 2014, the reduction of poverty there has majorly decreased while the inequality of the people has gone up. According to reports, about 68 million Indonesians will likely fall into poverty because of shocking economic factors such as illness and job loss.

   When it comes to urbanization there, it seems as though the rich and the poor are greatly separated. From 2010 through 2015, this rate has grown steadily (not to the benefit of the low income residents) at a speed of 2.45% annually. The income share in the country that is held by the highest 10% sits at approximately 33% in Indonesia – the lowest 10% is currently around 3.22. The industry value added since the year 2014 is just under 46%, and the consumer prices for inflation (the annual percentage) has fluctuated since 2010. Back then it was at 5.1, then it rose by .3 in 2011. There was a sudden huge drop down to 4.3 the following year, but then a huge recovery came about when it jumped all the way up to 6.4 in 2013.

   The flip-flopping pattern of inflation has been one that has majorly affected the economy in Indonesia in the last two years. The last half of 2014 was when it dramatically went down from 7.3% to 4% just during the spring and summer months. Then, as the fall approached, it steadily rose again to around 5% in October and November, then to 8.3% in January! Inflation has just about leveled off to where it was 12 months ago as of today, sitting at just under 7% according to Statistics Indonesia.


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