Economic Growth Projection Economist RI 5.5 Percent In 2025

Illustration. (Photo: Doc. Antara)

JAKARTA - Bank Permata economist Josua Pardede projects that Indonesia's economic growth can reach 5.15 percent by 2025.

According to him, the uncertainty surrounding the economic policies of Indonesia's new government will subside by the end of 2024.

The uncertainty surrounding Indonesia's new government economic policy is expected to subside, along with Prabowo's alignment with the pro-growth agenda which is increasingly clear. Although global uncertainty has recently increased due to the Fed's lack of dovish stance and the increasing possibility of Trump winning the US presidential election, the path of cutting global policy interest rates, including the potential decline in BI-Rate, is still being anticipated," said Josua, quoted from Antara, Thursday, November 7.

Another factor that supports Indonesia's economic growth is the reduction in global policy interest rates, including the potential reduction in Bank Indonesia or BI-Rate interest rates.

This is expected to encourage increased direct investment and incoming capital flows, which provide further support for private sector investment.

It is known, in the third quarter of 2024, Indonesia's economic growth recorded a slowdown of 4.95 percent year-on-year (yoy). This figure slightly decreased from the second quarter which was recorded at 5.05 percent (yoy).

Domestically, household consumption growth is expected to remain stable, supported by relatively low inflation due to food supply normalization. The holiday season around Christmas and New Year is also expected to boost domestic demand and mobility in the fourth quarter of 2024.

Josua maintains expectations for Indonesia's economic growth in 2024 at around 5.04 percent, down slightly from 5.05 percent in 2023.

For 2025, household consumption is projected to increase, supported by controlled inflation in the target range and potential for further decline in the BI-Rate.

"In the future, we project that Indonesia's GDP growth will increase in 2025, mainly driven by strong household consumption and increased investment activity. On the other hand, the growth in government spending is expected to slow down, while net exports tend to be stable," he explained.

Di sisi perdagangan eksternal, lanjut Josua, ekspor neto diperkirakan akan tetap stabil relatif terhadap level tahun 2024. Pertumbuhan ekspor dapat memperoleh momentum karena penurunan suku bunga global dan efek dasar yang rendah mulai tahun 2024.

At the same time, import growth is projected to increase, driven by increased demand for input and capital goods to support investment activities.

As for the press conference on Tuesday (5/11), Coordinating Minister for Economic Affairs Airlangga Hartarto stated that Indonesia's economic growth in the third quarter of 2024 which was 4.95 percent (yoy) better than economic growth in a number of other world economic powers.

He considered that historically, economic growth in the third quarter often showed a decline in achievements in the previous quarter. The Central Statistics Agency (BPS) noted that Indonesia's economy grew 5.05 percent in the second quarter.

This, he continued, was due to the absence of national major activities, such as celebrations of religious holidays or school holidays which could drive the movement of domestic economic machines throughout the third quarter.

"However, when compared to other countries, we see that Singapore (economic growth) is relatively low at 4.1 percent, Saudi Arabia at 2.1 percent, the United States at 2.8 percent, and Mexico at 1.5 percent," said Airlangga.

He said that Indonesia achieved this growth with a low inflation of 1.7 percent (yoy) in October 2024 and a controlled debt ratio at the level of 39.4 percent amid increasing global geopolitical tension, not certain the results of the United States election, and the weakening of middle class purchasing power.