The Asian Development Bank (ADB) maintained its projection for Indonesia’s economic growth at 5.0% of Gross Domestic Product (GDP) in 2025 and 5.1% in 2026, according to its latest report, the Asian Development Outlook July 2025. As is known, Indonesia’s economic growth slowed to 4.9% in the first quarter of 2025 due to post-election impacts, particularly on investment and government spending.
“Private consumption remains the main driver, while investment growth slows,” the report stated, quoted Wednesday (July 23, 2025).
To maintain growth, the government raised its 2025 fiscal deficit target to 2.8% of GDP and launched several stimulus packages, such as food aid, cash assistance, and transportation discounts. Meanwhile, the government’s flagship free food program is being accelerated to reach 82.9 million people. Furthermore, Bank Indonesia has begun easing interest rates as a form of monetary relief. As is known, Bank Indonesia has lowered interest rates three times throughout 2025. These were in January, May, and July, each by 25 basis points (bps).
Along with the central bank’s interest rate cut, bank lending rates have also gradually decreased, reaching 9.16% as of June 2025, from 9.20% in January 2025.
“As a support measure, the monetary authority is gradually easing policy amid relatively small risks to price stability. Import data in April and May suggest a possible increase in domestic demand,” the report stated.
However, sluggish industrial production, weak formal job creation, and sluggish private investment could weigh on the outlook. Furthermore, new external risks could also potentially add to pressure.
July 23, 2025, CNBC Indonesia
(https://www.cnbcindonesia.com/news/20250723114931-4-651483/adb-tetapkan-proyeksi-pertumbuhan-ekonomi-ri-50-tahun-2025)