ASIATODAY.ID, WASHINGTON — Indonesia continues to stand out as one of the world’s most resilient economies, according to the preliminary findings of the IMF’s 2025 Article IV Consultation, completed after a mission to Jakarta on November 3–12, 2025.
The IMF highlighted Indonesia’s robust growth, well-anchored inflation, and strong external buffers despite persistent global uncertainties.
This assessment reinforces Indonesia’s position as a key economic anchor in Asia and a preferred destination for long-term investment.
Stable Growth, Anchored Inflation, and Strong External Position
Led by Mission Chief Maria Gonzalez, the IMF team stated that Indonesia’s macroeconomic performance remains solid even as the global environment becomes more challenging. The IMF projects:
GDP growth of 5.0% in 2025
GDP growth of 5.1% in 2026
Inflation converging toward the midpoint of Bank Indonesia’s target range
A well-contained current account deficit
Comfortable foreign exchange reserves
According to the IMF, Indonesia’s effective coordination of fiscal and monetary policies has played a significant role in sustaining macroeconomic stability and economic momentum.
Downside Risks Remain, but Structural Reform Presents Major Upside Potential
The IMF noted that risks to Indonesia’s economic outlook remain tilted to the downside due to: escalating global trade tensions, prolonged geopolitical uncertainty, volatility in global financial markets, weaker external demand.
Domestically, the IMF warned that major policy shifts without strong safeguards could create new vulnerabilities.
However, the IMF also underscored substantial upside potential if Indonesia accelerates structural reforms, particularly in: regulatory simplification and investment climate improvements, strengthening trade integration and reducing non-tariff barriers, enhancing infrastructure quality, boosting productivity across sectors, improving governance and anti-corruption measures, supporting MSME transformation and encouraging FDI.
The IMF highlighted Indonesia’s proactive trade diplomacy—particularly recent progress with Canada and the EU (IEU-CEPA), as well as ongoing negotiations with the United States—as a positive step toward unlocking long-term productivity gains.
Fiscal Policy: Deficit to Reach 2.8% of GDP in 2025, But Fiscal Space Remains Strong
The IMF expects Indonesia’s fiscal deficit to widen to 2.8% of GDP in 2025, slightly above the government’s 2.7% projection for the 2026 budget. For 2026, the IMF estimates the deficit will remain close to 2.9% of GDP.
Despite the widening deficit, the IMF considers Indonesia’s fiscal space adequate and manageable, provided the government maintains:
1. Prudent and efficient budget execution
Especially in managing priority spending and mitigating quasi-fiscal risks.
2. Stronger revenue mobilization
Including tax reform to enhance long-term resilience.
3. Higher-quality and more productive public expenditure
Particularly in education, infrastructure, health, and digitalization.
Monetary Policy: Room for Further Rate Cuts
Bank Indonesia has reduced its policy rate by 150 basis points and implemented liquidity-enhancing measures to support credit expansion. The IMF views these actions as appropriate and well-calibrated, stating that:
There remains room for further rate cuts,
Any adjustment should be data-dependent,
Policy decisions must consider global shocks and the fiscal stance,
Exchange rate flexibility should remain an important stabilizing tool.
Under the IMF’s Integrated Policy Framework, the Fund acknowledged that foreign exchange intervention can complement monetary policy during heightened volatility, while still preserving international reserves.
Financial System: Resilient but Requires Vigilance
The IMF assessed that Indonesia’s financial system is broadly resilient. However, as credit growth accelerates, the Fund recommends a gradual shift toward a more neutral macroprudential stance to mitigate potential macro-financial risks.
Golden Vision 2045: Reform Momentum Will Determine Indonesia’s Path to High-Income Status
The IMF reaffirmed support for Indonesia’s Golden Vision 2045 to become a high-income economy. Achieving this goal will require comprehensive structural reforms across: infrastructure development, education and skills enhancement, governance and institutional strengthening, inclusive downstream industrialization, MSME empowerment and digital transformation, deeper global trade integration, a more dynamic private sector and stronger FDI inflows.
The IMF emphasized that Indonesia’s recent trade initiatives could be a “significant driver of long-term growth and productivity”.
IMF Commends Constructive Engagement with Indonesian Authorities
The IMF expressed appreciation to the Government of Indonesia, Bank Indonesia, the Financial Services Authority (OJK), and representatives from the private sector and civil society for their transparency and constructive dialogue throughout the mission.
Indonesia Remains a Standout Economy in an Uncertain Global Landscape
The 2025 IMF Article IV preliminary report reinforces Indonesia’s status as: a resilient economic performer in Asia, a stable magnet for investment, an economy with strong medium-term prospects, a nation well-positioned to reach high-income status with the right reforms. (AT Network)
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