Asia Economy

This $4.5 trillion problem could rattle Indonesia

Himawan Listya Nugraha | Anadolu Agency | Getty Images

Indonesia­ emerged as Southeast Asia's largest economy thanks to a steady rise in gross national income per capita in the past decade, but robust progress threatens the country with a trillion-dollar burden.

Non-communicable diseases (NCDs) could cost Indonesia as much as $4.5 trillion from 2012 to 2030, the World Economic Forum (WEF) warned in a new report on Monday. That's more than five times Indonesia's gross domestic product (GDP) in 2012.

NCDs, which include cardiovascular disease, cancer, chronic respiratory diseases, diabetes and mental health conditions, accounted for 71 percent of total deaths last year, up from 50.7 percent in 2004. Cardiovascular disease is the costliest NCD, accounting for 39.6 percent of the total loss of GDP output.

Two primary factors underlie the increase, WEF said: "First, the continuous drop in fertility and mortality has led to an ageing of the society. Second, the economic growth has been accompanied by rapid urbanization. This has led to a steady increase in the prevalence of risk factors such as tobacco use, harmful alcohol use, poor diet and sedentary lifestyles."

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NCDs have significant economic consequences as they impact various factors including consumption expenditure, savings into healthcare, labor supply and productivity.

"NCDs mortality directly reduces labor supply by reducing the number of working-age individuals. The reduction in the size of the labor force then translates into a loss in aggregate output," the report said.

Regional comparisons

Indonesia's NCD burden is more severe than its neighbors' in both absolute and relative terms, WEF said, which means Indonesia will see a greater reduction in productive capacity.

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India's estimated total output loss from NCDs is $4.3 trillion during the 2012-2030 period, but it should be noted that Indonesia only has one-fifth of India's population and one-half of its annual GDP.

From 2012-2030, China's total NCD-related loss is 3.57 times its 2012 GDP, while the corresponding loss for Indonesia over the same time period is 5.1 times its 2012 GDP.

Call for action

There are promising estimates of returns on investment (ROI) for interventions to reduce NCDs, WEF said.

"Investing in population health not only improves health, but also contributes to prosperity and provides both social and financial protection."

In India for example, interventions focused on vaccinations and reduced tobacco consumption promised a 15 percent ROI, according to a joint WEF and Harvard School of Public Health study.

"All stakeholders can benefit from investing in maximizing healthy life years and help move the current landscape from healthy as a cost to healthy as an investment," WEF said.