IMF Forecasts Indonesian Economy to Grow Only 5 Percent in 2026, Still Below the APBN Target

JAKARTA - The International Monetary Fund (IMF) maintains its projection of Indonesia's economic growth at 5.0 percent in 2026 and 5.1 percent in 2027.

The projection was conveyed in the latest report of the World Economic Outlook (WEO) Update: Global Economy in Crosscurrents of War and Technology edition of July 2026.

The outlook for Indonesia's economic growth is in line with the average growth of emerging countries in the Asia region (Emerging and Developing Asia) which is also estimated to reach 5.0 percent in 2026.

Indonesia's performance is also projected to be higher than the average economic growth of the ASEAN-5 countries, which include Indonesia, Malaysia, the Philippines, Singapore, and Thailand, which are estimated to grow by only 4.1 percent this year.

However, the IMF's projection is still below the government's target for economic growth in the 2026 State Budget, namely 5.4 percent.

At the global level, the IMF estimates that the world economic growth rate will slow to 3.0 percent in 2026, before gradually increasing to 3.4 percent in 2027.

In its report, the IMF explained that current global economic activity and prospects are influenced by two main factors moving in opposite directions.

"First is the negative supply shock due to the war in the Middle East. Second is the ongoing positive technological shock, reflected in the acceleration of the global technology cycle momentum, a phenomenon largely driven by the progress and application of artificial intelligence (AI) devices," wrote the IMF in its report, quoted Thursday, July 9.

The IMF assessed that the global economy has so far been able to cope with the impact of geopolitical conflicts better than initial estimates and the impact on commodity prices, inflation expectations, and financial conditions is still relatively limited.

However, the IMF cautioned that this transmission process is still in the early stages of destocking for both commercial and strategic purposes has provided temporary relief amid declining energy supplies.

Meanwhile, prospective indicators, such as supply chain pressures and manufacturing purchasing managers' indices (PMI), indicate a weakening momentum in the future and some countries are under greater pressure than others.