automotive

OECD Cuts Economic Growth Projections, These Investment Instruments Are Worth A Look

The Organisation for Economic Co-operation and Development (OECD) has again cut its projection for Indonesia's economic growth in its initial report in June 2025. For 2025, the OECD's latest projection is at 4.7% YoY, while for 2026 it is 4.8% YoY. This figure is down 0.2 percentage points compared to the projection in March 2025. 

This cut is the second from the OECD throughout the current year. Previously, in March 2025, the OECD had also lowered its outlook for Indonesia's economic growth. This series of corrections shows concerns over Indonesia's economic prospects in the medium term. 

"The downgrade from the OECD signals the need for extra vigilance, especially since cuts twice a year are rare and indicate increasing economic risks," said the Stockbit Sekuritas research team, quoted Saturday (7/6/2025). 

Not Just Global, Domestic Issues Are More Pressing 

Although global economic growth has also been cut to 2.9% YoY for 2025 and 2026—the OECD emphasizes that the correction to Indonesia's prospects is more due to domestic factors. Among them are pressure on household consumption and private investment due to fiscal uncertainty and high interest rates. 

The OECD also noted that the impact of the US import tariff policy on Indonesia is relatively limited. This is because Indonesia's export contribution to the US is only around 2% of national GDP. This confirms that domestic factors are the main cause of the weakening of Indonesia's economic growth 

"Weakening business and consumer sentiment and high borrowing costs are significant factors limiting domestic consumption and investment in the short term," said the Stockbit Sekuritas research team. 

External Risks Shadow Domestic Recovery 

Although the OECD projects that domestic demand will begin to recover in the second half of 2025 to 2026, several external risks still loom. Among them are increasing global trade tensions and pressure on the rupiah exchange rate due to potential capital outflows. 

The OECD estimates that Indonesia's inflation will rise to 2.3% in 2025 and 3% in 2026, after the end of the electricity tariff discount effect and the impact of the rupiah depreciation. In addition, the prospect of public investment spending through the BPI Danantara fund is expected to be a catalyst for recovery, but still depends on its implementation. 

"The risk of capital outflow and imported inflation is still high, especially if global and domestic uncertainty does not subside soon," said the Stockbit Sekuritas research team. 

Tag: BPI Danantara National GDP OECD