Indonesia’s GDP Growth on Track for 2025 Target of 5.2%

Indonesia’s overall GDP growth is projected to meet the target of 5.2 percent for 2025, despite significant challenges posed by severe flooding last year. During a recent gathering of Indonesia’s financial stability board, Finance Minister Purbaya Yudhi Sadewa confirmed the anticipated growth, noting that the economy showed signs of accelerated performance in the fourth quarter of 2024.

Looking ahead, the government has set a growth target of 5.4 percent for 2026, indicating continued optimism for the nation’s economy, which is valued at approximately $1.4 trillion. The finance minister’s remarks reflect confidence in the resilience of Indonesia’s economic framework, even in the face of environmental setbacks.

In a related statement, Perry Warjiyo, Governor of Bank Indonesia, emphasized the central bank’s commitment to maintaining a stable economic environment. He mentioned that the bank would consider opportunities to lower interest rates further to bolster economic growth. The current benchmark 7-day reverse repurchase rate remains at 4.75 percent, where it has been since September 2024. This represents a total reduction of 150 basis points from September 2024 to September 2025.

Warjiyo also addressed concerns regarding the stability of the Indonesian rupiah, which has faced pressure recently amid worries about the independence of the central bank. He reassured stakeholders that Bank Indonesia would undertake necessary market interventions to support the currency. “In formulating monetary policy, we will always look at inflation, exchange rates, and economic growth data,” Warjiyo stated, reinforcing the bank’s proactive stance.

The ongoing efforts to stabilize the rupiah are crucial, particularly as the currency has weakened this month. Warjiyo expressed optimism that the rupiah would stabilize and potentially strengthen in the near future, which would provide a more favorable backdrop for economic activity.

Overall, Indonesia’s path towards achieving its projected economic growth targets reflects a broader strategy that includes careful monitoring of inflation and currency stability. The collaborative efforts of financial authorities and the government signal a commitment to fostering a resilient economic environment in the face of external and internal challenges.