The International Monetary Fund (IMF) has decided to stick with its current projections for Indonesia’s economic growth for both this year and the next, despite these estimates falling short of the ambitious targets set by the Indonesian government.
In the July 2024 edition of its World Economic Outlook, the IMF has forecasted that Indonesia’s economy will grow by 5% in 2024 and by 5.1% in 2025, maintaining the same figures it projected in April 2024.
Contrastingly, the Indonesian government, under President Joko Widodo, has set higher growth targets. The 2024 State Budget Assumptions aim for a 5.2% growth rate, and the 2025 Draft State Budget Assumptions project growth between 5.1% and 5.5%.
The IMF’s forecast for Indonesia mirrors its steady outlook for the ASEAN 5 economies, which include Malaysia, the Philippines, Singapore, Thailand, and Vietnam. For these countries, the IMF also maintained its growth forecasts at 4.5% for 2024 and 4.6% for 2025.
The global economic growth forecast remains unchanged from the April 2024 World Economic Outlook, with the IMF expecting the world economy to grow by 3.2% this year. However, the projection for 2025 has been slightly revised upward to 3.3%, from the earlier estimate of 3.2%.
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“Our global growth projections remain unchanged at 3.2% this year and slightly higher at 3.3% for next year,” said Pierre-Olivier Gourinchas, Director of the IMF’s Research Department, in a statement released on Wednesday (July 17, 2024).
The IMF attributes the expected improvement in the global economy to a reduction in inflationary pressures. “As in April, we project global inflation to slow to 5.9% this year from 6.7% last year, and generally be on track towards a soft landing,” explained Pierre.
Emerging market countries in Asia are highlighted as the main drivers of the global economy, with India leading the charge. The IMF has revised India’s economic growth forecast upward to 7% for this year, up from an earlier estimate of 6.8%.
On the other hand, the IMF’s cautious stance on Indonesia’s growth prospects underscores the challenges faced by the nation as it strives to align its economic performance with government targets. This divergence highlights the complexities involved in economic forecasting and the balancing act required to achieve sustainable growth.
In summary, while the IMF maintains a steady outlook for Indonesia’s economic growth, the Indonesian government remains optimistic with higher targets. The ongoing support from emerging markets in Asia and the anticipated easing of global inflationary pressures provide a context of cautious optimism for the global economic landscape in the coming years.
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