Grace el Dora, Jakarta – The International Monetary Fund has raised its economic growth forecast for Indonesia in 2026, signaling growing confidence in the country's resilience even as global trade and policy uncertainty continues to cloud the outlook.

In its January 2026 World Economic Outlook, the IMF projects Indonesia's economy will expand by 5.1% year on year in 2026, up 0.2 percentage points from its October estimate. The fund also lifted its 2027 forecast to 5.1%, while maintaining its 2025 projection at 5.0%.

Indonesia's economy grew 5.04% year on year in the third quarter of 2025, indicating steady momentum toward the government's full-year target. While the 2025 state budget assumes growth of about 5.2%, both official projections and analysts expect a more realistic outcome in the range of 5.0% to 5.1%. The government has set a more ambitious growth target of 5.4% for 2026.

The IMF said Indonesia's outlook is underpinned by strong domestic consumption, macroeconomic stability, and an improving investment climate, with private-sector adaptability and technology-driven development supporting medium-term growth.

Globally, the IMF expects growth to hold at 3.3% in 2026 and 3.2% in 2027, citing resilience despite lingering trade frictions. Since October, trade tensions have eased, including a temporary truce between the US and China that reduced tariffs through November 2026, though policy uncertainty remains elevated.

The World Bank, meanwhile, projects Indonesia's growth to remain at 5.0% in 2026 before edging up to 5.2% in 2027, supported by state-led investment, monetary easing and foreign direct investment. Risks are broadly balanced, with potential headwinds from weaker real wages, renewed trade tensions and volatile capital flows.

The IMF cautioned that global risks remain tilted to the downside, but said stronger investment linked to technology and artificial intelligence could further lift growth if productivity gains materialize.

Source: https://jakartaglobe.id/business/imf-raises-indonesias-2026-growth-forecast-to-5