Ilona Estherina, Jakarta – The World Bank has lowered its 2026 economic growth forecast for Indonesia to 4.7 percent, down from its previous projection of 4.8 percent issued in October 2025, citing rising oil prices and heightened investor caution in global financial markets.

The revised outlook was published in the April 2026 edition of the East Asia and Pacific (EAP) Economic Update.

In the report released on April 8, 2026, the World Bank said Indonesia's economic growth is projected to slow to 4.7 percent due to headwinds from higher oil prices and risk-off sentiment.

The new forecast is lower than Indonesia's most recent economic growth rate of 5.1 percent. For 2027, however, the World Bank expects Indonesia's growth to rebound to 5.2 percent, supported by investment from Danantara and a more accommodative monetary policy.

Beyond Indonesia, the World Bank also warned of a broader slowdown across the East Asia and Pacific region in 2026 as external shocks weigh on growth.

Regional growth is projected to ease to 4.2 percent in 2026, from 5.0 percent in 2025, as an energy shock triggered by the conflict in the Middle East compounds the negative effects of rising trade barriers, international policy uncertainty, and domestic economic challenges, according to the World Bank.

World Bank Research Group Director Aaditya Mattoo said the region has shown strong resilience in the past, but warned that current conditions could create heavier economic burdens and slow productivity growth.

"The region's resilience in the past has been remarkable, but current challenges can increase economic burdens and hinder productivity growth," Mattoo said in an official statement.

The World Bank said the economic impact of the Middle East conflict will vary depending on each country's reliance on fuel imports, existing vulnerabilities, and policy flexibility. A prolonged escalation, it said, could further weaken economic conditions and drag down regional growth.

The report also warned that a sustained 50 percent increase in fuel prices could reduce household incomes across the region by 3 to 4 percent.

To cushion the impact, the World Bank recommended targeted support for low-income and vulnerable households as well as small and medium-sized enterprises, saying such measures could help those most in need without placing excessive strain on public finances.

Source: https://en.tempo.co/read/2097245/world-bank-cuts-indonesias-2026-growth-forecast-to-4-