Alfitria Nefi P, Jakarta – The Institute for Development of Economics and Finance (INDEF) predicts that Indonesia's economic growth in 2025 will be lower after the Ministry of Finance revised it to 5 percent. Researcher Esther Sri Astuti from INDEF stated, "The reality will be lower," during a live-streamed discussion on YouTube on Tuesday, July 2, 2025.
Esther explained that this condition could occur due to a fiscal deficit of 2.78 percent in the first half of this year.
She stated that the soaring fiscal deficit would impact the debt payment portion of the gross domestic product (GDP). She predicted that the portion of the GDP allocated to debt payments would rise to 40 percent. "This is not just fiscal pressure, but a significant multiplier effect," she said.
She also highlighted the potential reduction in spending by ministries, agencies, and regional transportation. "This is not only felt nationally, but also locally." She believes the government will not achieve its 8 percent economic growth target if it continues to implement contractionary policies.
Prior to this, Finance Minister Sri Mulyani Indrawati announced the reduction of Indonesia's economic growth. "We estimate that Indonesia's economic growth in 2025 will be around 4.7 to 5.0 in the second semester," she said during a meeting with the Budget Committee of the House of Representatives on Monday, July 1, 2025.
In the World Economic Outlook report in April 2025, the IMF revised its projections for the economic growth of countries worldwide. The IMF predicts that Indonesia's economy in 2025 will only grow by 4.7 percent, down from the previous projection of 5.1 percent.
The correction in the IMF's growth projection is due to the escalation of trade wars following the announcement of reciprocal tariffs by the United States. Sri Mulyani stated that the IMF revised the economic growth forecast for Indonesia by 0.4 percent lower than the previous prediction.
However, Sri Mulyani stated that the IMF's assessment of Indonesia's economy is more favorable than other countries. For example, Thailand was revised by 1.1 percent from the previous estimate, Vietnam by 0.9 percent, the Philippines by 0.6 percent, and Mexico by 1.7 percent.
According to Sri Mulyani, the depth of the IMF's revision for some countries is due to their significant dependence on international trade. "Their exposure to international trade is greater, and the impact or relationship of their economy with the U.S. is also greater," Sri said.
– Ilona Estherina contributed to the writing of this article