IMF Projects Indonesia's Economy to Stagnate at 5.1% Despite Prabowo's 8% Growth Ambition

TEMPO.CO, Jakarta - The International Monetary Fund (IMF) projects that Indonesia's economic growth will stagnate at 5 to 5.1 percent in 2024-2029. The forecast contrasts with the 8 percent economic growth target promised by president-elect Prabowo Subianto.

In its 2024 Country Report Issue 270, the IMF predicts that Indonesia's economic growth will rise to a range of 5 to 5.1 percent in 2024-2025, followed by stagnation at an annual range of 5.1 percent between 2025 and 2029.

"Growth would reach 5.0 and 5.1 percent in 2024 and 2025, respectively, with dynamic domestic demand offsetting the drag from weaker commodity prices," the report said, as quoted by Tempo on Tuesday, Aug. 13.

The report also stated that "The authorities are more optimistic about growth compared to the staff's projections. They believe that a range of 4.7-5.5% in 2024 and 4.8-5.6% in 2025 is attainable, driven mainly by domestic demand."

However, the IMF said there is optimism that medium-term growth will rise to 6-7% annually, driven by economic transformation through structural reforms aimed at achieving the 2045 Golden Indonesia Vision. "This includes comprehensive efforts to enhance human capital, continue developing infrastructure, and improve the business and investment climate."  

Prabowo confident of 8 percent economic growth

On the other hand, President-elect Prabowo Subianto believes that Indonesia's economy can grow at a higher rate during his five-year term. "For me, I am optimistic that we can reach 8 percent," Prabowo said in a speech at the launch of the One One Map Policy Geoportal in Jakarta last month. 

In fact, Prabowo is confident that the Indonesian economy will be able to achieve growth of up to 8 percent in the next two to three years, as he said when he attended the Qatar Economic Forum 2024 in Doha in May, accompanied by Vice President-elect Gibran Rakabuming Raka.

"I'm very confident, I've talked to experts and studied the numbers. I'm sure we can get to 8 percent easily. I'm determined to surpass that," he said in Doha,

Prabowo said Indonesia could easily achieve economic growth of 8 percent within 2 to 3 years.

According to government data earlier this month, Indonesia's economy grew at an annual rate of 5.11 percent in the January-March period, the highest in three quarters.

Prabowo said he would uphold the tradition of prudent fiscal management, saying he intended to keep the budget deficit limit at 3 percent of gross domestic product (GDP).

"This is about refocusing and reducing waste, reducing allocations to non-essential activities," he said. "I think now is the time to be more daring in implementing good governance."

Raden Putri, Riani Sanusi, Daniel A Fajri

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