Jakarta. Indonesia’s growth is expected to reach 4.9% this year, according to estimates by a UN regional commission, higher than the 4.4% outlook for close neighbor Malaysia.

A report freshly published by the UN Economic and Social Commission for Asia and the Pacific (ESCAP) showed that Indonesia’s economy would not pass the 5-percent mark this year. 

Indonesia’s real gross domestic product (GDP) growth is expected to slow from 5.1% in 2025 to 4.9% the following year, before returning to the 5-percent territory in 2027. Malaysia’s economy is seen easing 4.4% in 2026 from 5.1% registered in the previous year. The reading for 2027 only edges up 0.1 percentage point for Kuala Lumpur.

Most ASEAN economies will witness a weaker pace, except for Brunei Darussalam, Myanmar, and the Philippines. As expected, Vietnam tops the Southeast Asian growth ranking from the UN, with 7.6% set for 2026 before rising to 7.8% the following year.

ESCAP reported that its projections already factored in the immediate macroeconomic impacts of the Iran war, which had erupted following a US-Israel attack in late February. 

“All the data on which we based our assessment in terms of forecast is essentially up until March 17,” Hamza Malik, the agency’s director of the macroeconomic policy and financing for development division, told a press briefing in New York on Monday.

“We had to make a lot of assumptions, regarding in particular the duration of the conflict, how wide it’s going to spread, and the intensity,” Malik said, while adding that the report assumed the conflict would cool down by the year-end. 

Malik named the uptick in trade protectionism as a major risk to the economy, alluding to US President Donald Trump’s tariffs.

But the latest estimates mean that Indonesia still falls short of its 5.4% target. The Asian Development Bank (ADB) estimates that Southeast Asia’s biggest economy will expand 5.2% this year. The World Bank downgraded its 2026 outlook for Indonesia from 4.8% to 4.7%.