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Indonesia aims 5.1 percent to 5.5 percent economic growth in 2025

Jakarta Globe - May 20, 2024

Arnoldus Kristianus, Jakarta – The government aims to achieve economic growth between 5.1 percent and 5.5 percent in 2025, focusing on sustainable inflation, the development of the electric vehicle industry, digitalization, and climate change initiatives through green economy and energy policies. Indonesia had set a

"We are optimistic that with hard work to maintain economic stability and a commitment to breakthrough policies, economic growth is projected to reach 5.1 percent to 5.5 percent. This growth rate is expected to lay a strong foundation for higher growth in the following years," said Finance Minister Sri Mulyani Indrawati during a plenary session at the Parliament building in Jakarta on Monday.

Meanwhile, President-elect Prabowo Subianto recently expressed confidence in achieving 8 percent economic growth within the first two to three years of his presidency. He highlighted food production and Indonesian biodiesel production as key drivers of this growth, which surpasses current rates.

Indonesia's economic growth in the first quarter of 2024 reached 5.11 percent year on year (yoy), slightly below the Finance Ministry projection of around 5.17 percent. The government had set a target of 5.2 percent GDP growth this year.

In comparison, the International Monetary Fund (IMF) projects Indonesia's growth rate to reach 5 percent for both the present and upcoming years. Meanwhile, the World Bank forecasts a slight decline in growth for 2024 and 2025, with rates anticipated to settle at 4.9 percent annually.

Sri Mulyani said that the effectiveness of fiscal policy in supporting accelerated economic growth to improve welfare will be reflected in the 2025 target. The 2025 State Budget (APBN) is designed as a cornerstone towards Golden Indonesia 2045, with an emphasis on inclusive and sustainable economic growth. The country hopes to become one of the world's top five economies with a GDP of up to $9 trillion in 2045, exactly a century after it won independence from Dutch colonizers.

Social, education, and health budget

The government has allocated a social protection budget ranging from Rp 496.9 trillion ($31.09 billion) to Rp 513 trillion. This budget will be used to expedite poverty alleviation and reduce regional disparities.

The social protection programs include strengthening social protection, increasing access to affordable and decent housing, and supporting farmers and fishermen, as well as accelerating the development of self-sufficient villages.

In the education sector, the government has allocated a budget of Rp 708.2 trillion to Rp 741.7 trillion. This budget aims to achieve high-quality and competitive education through several flagship programs. These programs include improving school children's nutrition, enhancing school quality, upgrading facilities and infrastructure, increasing enrollment rates in early childhood education and higher education, improving the quality of educators, and strengthening vocational training.

The health budget for 2025 ranges from Rp 191.5 trillion to Rp 217.8 trillion. To achieve quality healthcare, the government will focus on enhancing the effectiveness of the National Health Insurance (JKN) program.

Here are Indonesia's 2025 macroeconomic targets:

  • Economic growth: 5.1 percent-5.5 percent
  • 10-year government bonds (SBN) yield: 6.9 percent-7.3 percent
  • Exchange rate: Rp 15,300 – Rp 16,000 per US dollar
  • Inflation: 1.5 percent-3.5 percent
  • Indoensia Crude Price: $75- $85 per barrel
  • Oil production: 580,000-601,000 barrels per day
  • Gas production: 1,003-1,047 barrels of oil equivalent per day (BOEPD)

2025 development targets:

  • Open unemployment rate: 4.5 percent to 5 percent
  • Poverty rate: 7 percent to 8 percent
  • Gini ratio: 0.379-0.382

Source: https://jakartaglobe.id/business/indonesia-aims-51-percent-to-55-percent-economic-growth-in-202