Friday, December 07, 2012

6000 in 2016? Wow! - and the Gini ratio

So, according to an economist from Deutsche Bank in Jakarta, Indonesia's GDP/capita can reach USD 6,000 by 2016. Now it's about USD 3,500.

That's amazing. Because, if we assume a growth rate of 6.5% per annum, we will only get to USD 6,000 in nine years from now, that is 2021. Or, maybe he thinks we will have a far higher growth rate? Let's try 10% then (yes, that's ambitious!). Well, according to the growth formula, we'll get to USD 6,000/capita in mid 2017.

Understandably, some people criticise the number. This one goes further to say, even if the per capita income jumps, we still face a worsening inequality. She is right (although her definition - or Kompas' definition? - of Gini ratio is not exactly right). But to be fair, we can say our inequality (that is, represented by, among all, the Gini ratio) has been worsening, compared to ourselves in the past periods. In 2007 the Gini ratio was 0.33. By first quarter of 2011 it was 0.41 (Gini ratio goes from 0 i.e "perfect equality" to 1 i.e. "perfect inequality"). As for comparison to other countries:, e.g. China 0.44, Malaysia 0.46, US 0.47 - we're better. Of course there are many other measures of inequality, not just this Gini ratio.

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