Indonesia Maintains 5.2 Pct Growth Ambition Despite Q1 Slowdown, IMF Downgrade
Jakarta. Indonesia is aiming for economic growth in the range of 5.2 percent to 5.8 percent in 2026, with a long-term target of reaching 8 percent expansion by 2029, Finance Minister Sri Mulyani Indrawati said on Tuesday.
Speaking at a parliamentary session in Jakarta, Sri Mulyani stressed the need for national unity and collaboration to navigate ongoing global economic challenges, including heightened geopolitical risks and declining global demand.
"Amid global challenges, we must continue to work hard and strengthen collaboration across all sectors of the nation to achieve our 2026 growth assumptions of 5.2 percent to 5.8 percent," she said.
The government’s outlook comes as Indonesia’s economy showed signs of slowing. The Central Statistics Agency (BPS) reported GDP growth of 4.87 percent year-on-year in the first quarter of 2025, down from 5.04 percent in the previous quarter. Indonesia’s GDP growth target in the 2025 state budget is set at 5.3 percent.
Despite the slowdown, the government is maintaining inflation within a controlled range of 2.5 percent, plus or minus one percent. In April 2025, year-on-year inflation stood at 1.95 percent.
The rupiah is projected to remain stable between Rp 16,500 and Rp 16,900 per US dollar. As of Tuesday, the currency stood at Rp 16,370. The 10-year government bond yield is expected to hover between 6.6 percent and 7.2 percent, supported by a favorable spread and strong investor confidence in the country’s macroeconomic fundamentals.
“The current growth momentum will form a strong foundation to reach 8 percent in the coming years, supporting our long-term vision of Golden Indonesia 2045,” Sri Mulyani said. The vision outlines Indonesia’s goal of becoming a developed nation by 2045.
She added that continued investor appetite in sovereign bonds, strong foreign direct investment, and resilient export performance will boost Indonesia’s fiscal and external position.
As geopolitical tensions linger and global activity remains under pressure, the government has set a crude oil price assumption of $60 to $80 per barrel for 2026. Oil production is targeted at 600,000 to 605,000 barrels per day, while gas production is set between 953,000 and 1.017 million barrels of oil equivalent per day.
“Fiscal policy will remain effective in accelerating national growth and improving welfare, including further reducing poverty rates,” she noted.
Still, external projections are more cautious. The International Monetary Fund (IMF) in its April 2025 World Economic Outlook trimmed Indonesia’s growth forecast to 4.7 percent for both 2025 and 2026, down from its earlier estimate of 5.1 percent, citing the ripple effects of US tariff adjustments.
The World Bank shares a similar view, projecting GDP growth at 4.7 percent in 2025, 4.8 percent in 2026, and 5 percent in 2027.
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