Jakarta. The Asian Development Bank (ADB) has kept its economic growth forecast unchanged for Indonesia, predicting a 5.2% expansion in 2026 and 2027.

Inflation is expected to hit 3.0% this year, compared with ADB’s 2.5% forecast in April. It should drop to 2.5% next year. At home, Bank Indonesia wants to keep inflation between 1.5 and 3.5%. Indonesia aims to grow by at least 5.4% this year.

The July edition of ADB’s flagship report shows that Indonesia is outpacing some ASEAN economies. 

Malaysia is projected to expand by 4.6% in 2026 and slow to 4.5% the following year. ADB trimmed its 2026 growth estimate for the Philippines by 0.6 percentage points from its April projections to 3.8%. Its forecast for 2027 also goes down from 5.5% to 5.3%. Thailand’s is the slowest in ASEAN, reaching 1.8% (2026) and 2.0% (2027). But they all do not come close to Vietnam’s 7% range in both years.

Outlook for the developing Southeast Asia category goes down by 0.1 percentage point to 4.6% in 2026. The 2027 projections for the group stays the same at 4.8%.

For developing Asia and the Pacific, ADB issued a 4.9% estimate, below the 5.1% in its April report. 

The Manila-based lender wrote that the energy shocks from the Middle East conflict “have weighed more heavily on the region’s prospects than anticipated”. According to ADB, a “durable implementation” of the framework pact between the warring US-Iran unveiled in June could help normalize the world’s energy markets.

“But the pace of adjustment is highly uncertain with significant downside risks,” ADB chief economist Albert Park said

ADB calls on the region to respond to the persistent headwinds by drawing a careful policy balance between supporting growth and containing inflation.

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