The 2025 Transaction Balance Deficit Is Estimated To Be Widening, Economists Say They Are Still Positive

JAKARTA - Bank Indonesia (BI) estimates that the current account deficit (CAD) will widen in 2025 in the range of 0.5 percent to 1.3 percent of gross domestic product (GDP).

Meanwhile, the current account deficit in 2024 is deeper, reaching 8.9 billion US dollars or 0.6 percent of GDP compared to 2023 which amounted to 2 billion US dollars or 0.1 percent of GDP.

Head of Bank Permata economist Josua Pardede estimates that the current account deficit (CAD) will widen to 1.18 percent of GDP by 2025.

According to him, this was driven by strong domestic demand and a pro-growth agenda that encouraged imports.

Meanwhile, exports will face challenges from the 2.0 Trade War, however, the deficit remains under control compared to the pre-pandemic level.

"The balance of financial transactions is expected to remain positive by 2025, supported by direct investment and other investments, although portfolio investments can record a deficit amid increasing global uncertainty," he told VOI, Friday, February 21.

Josua conveyed that the balance of payment (BoP) or Indonesia Payment Balance (NPI) in 2025 is projected to record a small deficit, leading to a reduction in moderate foreign exchange reserves by the end of the year.

According to him, in the end, the BoP deficit can limit space for lower benchmark interest rates or BI-Rate in 2025.

Josua added that mainly because global uncertainty reduces capital inflows, underlining the importance of monetary policy in maintaining Rupiah stability and suppressing import inflation.