World Bank Projects Indonesian Economy To Grow By An Average Of 4.8 Percent Until 2027

World Bank Projects Indonesian Economy To Grow By An Average Of 4.8 Percent Until 2027

, 04 May 2025

The World Bank (WB) projects Indonesia's economic growth to average 4.8 percent until 2027. In the Macro Poverty Outlook report released on Sunday, April 27, 2025, the World Bank estimates growth of 4.7 percent in 2025, 4.8 percent in 2026, and 5 percent in 2027.

According to the report, although Indonesia has experienced resilient growth, with declining poverty and unemployment, the creation of quality jobs, especially for the middle class, is still lagging behind. The World Bank also underlines the uncertainty of global trade policies and falling commodity prices that could affect investment and Indonesia's economic growth.

"One of the challenges faced is global and domestic policy uncertainty, which could depress investor confidence and portfolio outflows," said the World Bank. Even so, Indonesia's economic growth is still stable thanks to strong demand, which contributes to poverty reduction.

Indonesia, which in 2023 has achieved upper-middle-income country status, is targeting to become a high-income country by 2045. To achieve this target, the World Bank recommends that Indonesia accelerate its growth to reach 6 percent per year, with higher investment.

The Indonesian government itself is targeting 8 percent growth by 2029, which will be achieved through various structural reforms and investments that can increase economic capacity. The World Bank added that although the impact of changing trade policies is difficult to measure, the planned reform steps will help offset the negative impact of global uncertainty.

Other projections show that a positive output gap can keep inflation within Bank Indonesia's target range, while government spending is expected to increase to support new priority programs. As a result, Indonesia's fiscal deficit is projected to reach 2.7 percent of GDP in 2027.

In addition, foreign direct investment remains the main source of external funding, especially for industrial downstreaming, although this investment is expected to increase gradually over time, as foreign investors seek policy stability.

Risks to Indonesia's growth outlook remain, with uncertainties around trade policies, commodity prices and global economic conditions likely to pose further challenges. However, with the right structural reforms, Indonesia is expected to overcome these challenges and record sustainable growth.