Bank Indonesia Has Revised Its Projection For Indonesia's Economic Growth To A Range Of 4.6% To 5.4%

ANTARA FOTO/Bayu Pratama S/Spt/pri

Bank Indonesia Has Revised Its Projection For Indonesia's Economic Growth To A Range Of 4.6% To 5.4%

Monday, 26 May 2025

Bank Indonesia (BI) forecasts that Indonesia's economic growth in 2025 will range between 4.6 and 5.4 percent. This figure is lower than BI's previous estimate of 4.7 to 5.5 percent. In the first quarter of 2025, economic growth was recorded at 4.87 percent year-on-year, a decline from the 5.02 percent recorded in the fourth quarter of 2024.

"Various policy responses need to be strengthened to encourage economic growth," stated BI Governor Perry Warjiyo during a press conference on Wednesday, May 21, 2025. According to Perry, Indonesia's economic growth is expected to improve in the second half of 2025, driven by increased domestic demand, including a rise in government spending. Perry also claimed that the balance of payments remains stable with a resurgence of investment inflows in May 2025. The total capital inflow in May was recorded at IDR 20.63 trillion, supported by stocks and Government Securities. BI predicts that the current account deficit for 2025 will be in the range of 0.5 to 1.3 percent of Gross Domestic Product (GDP).

To boost economic growth, BI has reduced the benchmark interest rate to 5.50 percent from the previous 5.75 percent. BI also lowered the deposit facility rate to 4.75 percent from 5.00 percent. Additionally, the lending facility rate has decreased to 6.25 percent from 6.50 percent.

"The considerations are threefold: first, low inflation; second, the stability of the rupiah exchange rate; and third, to further encourage economic growth," Perry remarked. He noted that the inflation rate domestically is quite low and remains within the target of 2.5 plus or minus 1 percent. BI itself predicts that inflation at the end of the year will be at 2.6 percent.

In the April 2025 edition of the World Economic Outlook report, the International Monetary Fund (IMF) has revised Indonesia's economic projection down from 5.1 percent to 4.7 percent.

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