TEMPO.CO, Jakarta - Indonesia's economic growth in 2025 is predicted to decline. The Organisation for Economic Cooperation and Development (OECD) has revised its projection of Indonesia's economic growth in 2025 from 4.9 percent to 4.7 percent.
In March 2025, the OECD projected Indonesia's economic growth for this year to reach 4.9 percent. However, in the report on June 3, 2025, OECD lowered Indonesia's economic growth to 4.7 percent.
OECD argues that low inflation and improved financial conditions will stimulate consumption and private investment in Indonesia. However, uncertainty in domestic fiscal policy will hinder increases in consumption and investment.
Indonesia's inflation is expected to increase to 2.3 percent in 2025 and 2.6 percent in 2026. The inflation rate is influenced by the depreciation of the rupiah exchange rate, which affects domestic prices.
In the report, the OECD stated that weakening business and consumer sentiments amid fiscal policy uncertainty and loan interest rates will suppress private consumption and investment in the first half of 2025. Domestic demand is expected to increase gradually in the second half of 2025.
From the export side, OECD predicts a slowdown in export growth in 2025. Global trade tensions have recently disrupted Indonesia's export performance. The decrease in commodity prices will also weigh on external demand and export income.
To enhance economic growth, the OECD suggests structural reforms in Indonesia. According to the OECD, the Free Nutritious Food Program is beneficial for public health and helps prevent stunting, but increasing the target to vulnerable households will ensure more efficient government budget spending.
OECD also recommends that Indonesia expand its tax collection base. By expanding this tax base, Indonesia can invest more in the public sector, such as infrastructure, transportation, clean energy, and others, including for the healthcare and education budget, according to the OECD's report.
OECD also lowered the global economic growth projection to 2.9 percent for 2025 and 2026, down from the previous 3.1 percent. This decline is caused by increasing trade barriers, tighter financial conditions, and heightened policy uncertainty.
Anastasya Lavenia Y also contributed to the writing of this article
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