Jakarta. Indonesia’s economy is expected to continue to grow by over 5 percent in 2024 and 2025, according to a report by ASEAN+3 Macroeconomic Research Office (AMRO).

The report shows that Indonesia was estimated to witness a real gross domestic product (GDP) growth of 5 percent in 2023. Indonesia’s real GDP growth is forecast to reach 5.2 percent in 2024. It will also expand by 5.2 percent the following year.

“Indonesia is quite amazing in a sense that its growth rate has always been just a bit above 5 percent, even through the pandemic. It has been growing within the range of 5 and 5.3 percent,” AMRO’s chief economist Hoe Ee Khor told a hybrid press briefing on Monday. 

Indonesia recently held the world’s largest single-day election, and has officially declared the current defense minister Prabowo Subianto as its next president. The outgoing President Joko “Jokowi” Widodo will officially pass the baton to Prabowo this October. Khor commented on the elections, and whether the change in governments would impact Indonesia’s growth. 

“The government that is about to enter office is very close to the current one. We don’t expect to see huge policy changes. … Of course, the new government has its own priorities, and a long list of policy measures they would like to take. Some of which will depend very much on the [government’s] ability to mobilize more revenue. For instance, we will have free lunches for students, which can be quite costly,” Khor said.

Prabowo has promised Indonesians to continue Jokowi’s policies, while also introducing the free school lunch program as his strategy to slash the stunting rate. Early estimates show that Indonesia will require approximately up to Rp 120 trillion (about $7.5 billion) in the first year of its implementation. The costs will increase to Rp 450 trillion in 2029, during which the program is expected to already reach all students across the archipelago. In his final presidential debate, Prabowo claimed that free school meals could boost the Indonesian economy by a minimum of 1.5 percent and 2 percent. Finance Minister Sri Mulyani recently told reporters that the government would leave enough room for the school meal program in the 2025 budget.

“Over the past years, Indonesia has been very prudent in their fiscal policies, and even kept the fiscal deficit to below 3 percent. If they stick to [a 3-percent deficit cap], that will constrain the [Indonesian government] from overspending unless they mobilize more revenue,” Khor said.

He added: “As long as the macroeconomy remains relatively stable in terms of fiscal monetary policies, the Indonesian [economy] can continue to grow above 5 percent.”

To supercharge growth, Indonesia also needs to upscale its ability to attract foreign direct investment (FDI), particularly in the renewable energy and electric vehicle (EV) ecosystem sectors, according to Khor.

Indonesia has set an ambitious goal of attracting Rp 1,650 trillion in combined investments this year, surpassing the 2023 target of Rp 1,400 trillion. Last year, the country recorded about Rp 1,418 trillion in total investments, about 52.4 percent of which came from foreign investors.