Having Strong Performance, World Bank Projects Indonesia’s Economic Growth to Reach 5% in 2024

Tangguh Train 3
Tangguh Train 3 Project, a Monumental LNG Refinery in West Papua, Officially Inaugurated Today

Indonesia’s economic outlook has received a boost from the World Bank, which has revised its growth projection for 2024 to 5%. This marks an increase of 0.1 percentage points from the previous estimate of 4.9% made in January 2024. Alongside India, Indonesia is recognized as one of the region’s strongest performing economies.

The World Bank also adjusted its forecast for Indonesia’s economic growth in 2025, raising it to 5.1% from the earlier prediction of 4.9%. “Indonesia is expected to gain momentum from the growth of the middle class and generally sound economic policies, with an average growth rate of 5.1% over the next two years,” the World Bank stated in its June 2024 edition of the Global Economic Prospects report, released on Wednesday (12/6/2024).

Broadly, the World Bank anticipates that the economic growth of developing and emerging markets will slow down from 4.1% in 2023 to 4% in 2024. This trend is expected to stabilize in 2025 and 2026. Excluding China, the economies of developing countries are projected to grow slightly at a rate of 3.5% in 2024 before strengthening to 3.9% in 2025 and 2026.

The World Bank highlights that economic growth in most developing countries is likely to slow this year before stabilizing in 2025 and 2026. In contrast, some countries may see private consumption recover in 2024, with further strengthening in 2025 and 2026, as inflation declines and lower interest rates support real household incomes and consumer optimism.

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For emerging markets, including Indonesia, the investment outlook is expected to decelerate this year, maintaining a moderate pace in 2025 and 2026. Trade growth is projected to increase across developing countries in 2024 but will remain below pre-pandemic averages, particularly for some large nations, including China.

Trade growth is anticipated to further strengthen in many developing countries by 2025 and 2026, driven by increasing external demand and accelerated manufacturing activity. This positive outlook suggests that Indonesia, with its robust middle class and solid economic policies, is well-positioned to benefit from these global trends, ensuring steady growth in the coming years.

The World Bank’s projections underscore the resilience and potential of Indonesia’s economy, bolstered by a growing middle class and supportive economic policies. As global conditions evolve, Indonesia’s ability to adapt and harness these opportunities will be crucial for maintaining its upward trajectory and ensuring inclusive economic development.