JAKARTA - The government targets inflation at 2.5 percent and and economic growth is estimated at 5.2 percent in the 2025 State Revenue and Expenditure Budget Draft (RAPBN).

President Joko Widodo (Jokowi) said that the preparation of the 2025 RAPBN was based on the basic assumption that inflation would be maintained in the range of 2.5 percent and economic growth estimated at 5.2 percent.

"Inflation will be maintained in the range of 2.5 percent. Economic growth is estimated at 5.2 percent," he said in a speech delivering the 2025 RAPBN and Financial Notes, at the DPR Building, Jakarta, Friday, August 16.

Jokowi said that because global economic conditions are still relatively stagnant, our economic growth will rely more on domestic demand.

According to Jokowi, people's purchasing power will be closely maintained, by controlling inflation, creating jobs, and supporting social assistance and subsidies programs.

Jokowi emphasized that in the future, we must take advantage of the role of the State Budget to strengthen the leap of progress so that Indonesia can get out of the middle-income trap, namely by utilizing demographic bonuses, continuing economic transformation, increasing investment attraction and opening up more jobs.

To note, the inflation target is lower than the inflation outlook in 2023 of 2.7 percent to 3.2 percent.

The Ministry of Finance has set an inflation target of 2.5 percent year on year (yoy) by 2025 to 2027, with a deviation of 1.0 percent.

The target is listed by the Minister of Finance Regulation (Permenkeu) No.31/2024 concerning Inflation Targets for 2025, 2026, and 2027. That way, the inflation target for the next three years is set at 1.5 percent - 3.5 percent.

The determination of inflation's targets is carried out to achieve and control inflation at a stable and low level in order to support the achievement of sustainable economic growth, citing the regulation.

The types of inflation targets set use annual consumer price index inflation (JCI) at the end of the year. The shape of the inflation target is set using points with deviation.

For information, here is the inflation trend during President Jokowi's term of office in the 2nd period:

2019: 2.72 percent (yoy)

2020: 1.68 percent yoy

2021: 1.87 percent yoy)

2022: 5.51 percent (yoy)

2023: 2.16 percent (yoy)

2024: 2.13 percent (yoy) (as of July 2024)


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