Jayanty Nada Shofa, Jakarta – Indonesia will keep tabs on the fatal Sumatra floods before deciding whether to revise its economic growth target, according to a senior minister, as analysts warn that the disaster can deal a blow to the national gross domestic product (GDP).
Cyclone-induced floods and landslides have devastated the island of Sumatra. Aside from a staggering death toll of 770 as per the latest available data, think-tank Celios has warned that the catastrophe could shrink Indonesia's economy by at least Rp 68.67 trillion or $4.1 billion. The costs come from the disrupted flow of goods in other parts of the archipelago as transportation access gets cut off.
Asked whether the floods would dampen Indonesia's GDP growth, Chief Economic Affairs Minister Airlangga Hartarto said that the government was still observing the disasters, including their economic aftermath.
"We will monitor the developments. We are focusing on the emergency responses," Airlangga told reporters in his office on Wednesday.
He gave a similar reply to questions on whether the government intends to change its full-year and Q4 2025 targets. "We will keep an eye [on the Sumatra floods]," Airlangga said.
The government is pursuing an economic growth of around 5.2 percent year-on-year (yoy) in 2025. It was only a week ago when Airlangga said that he was confident of Indonesia's GDP expanding between 5.4 percent and 5.6 percent yoy in Q4 2025. The government at the time had just unveiled its latest stimulus package – which included double-digit airfare discounts – to amplify the year-end holiday spending and the overall economy.
President Prabowo Subianto insists on achieving an 8 percent growth during his term. Indonesia's natural annual growth rate has been around 5 percent, meaning that the Prabowo administration has to put great effort into turning the 8-percent dream into a reality. Indonesia's GDP rose 5.04 percent yoy in the third quarter of 2025.
A Celios report wrote that the economic damages from the Sumatra floods could cause the national GDP to drop Rp 68.67 trillion, or equivalent to a 0.29 percent decline. The estimated economic losses in the disaster-hit areas are as follows: Aceh (Rp 2.04 trillion); North Sumatra (Rp 2.07 trillion); West Sumatra (Rp 2.01 trillion).
Geographical distance does not prevent the economic impact from hitting other provinces. Jakarta's economy is expected to suffer a hit of Rp 1.88 trillion. Calculations run by Celios took into account the damaged infrastructure, houses, and weakened consumption as the disaster that had prevented the locals from going to work.
The OECD sets both its 2025 and 2026 real GDP growth forecasts for Indonesia at 5 percent, respectively. Growth will eventually pick up to 5.1 percent in 2027.
Source: https://jakartaglobe.id/business/indonesia-to-keep-eye-on-sumatra-floods-before-revising-gdp-targe