Permata Bank Projects Indonesia’s Economic Growth at 5.2% in 2025
JAKARTA, investortrust.id – Indonesia's economy has a potential to continue its expansion with anticipated growth reaching between 5.0% and 5.2% in 2025, having demonstrated resilience last year achieving a growth rate of 5.03%, according to Permata Institute for Economic Research, or PIER, the research division of a publicly listed lender PT Bank Permata Tbk.
Chief Economist of Permata Bank, Josua Pardede, shared this outlook during the Media Briefing PIER Economic Review: FY 2024 held virtually on Monday, Feb. 10, 2025. The discussion covered Indonesia's economic achievements in 2024 and updated projections for the current year.
"Despite various external challenges, Indonesia's economic fundamentals remain strong enough to support sustainable growth," Josua stated.
His projection aligned with other forecasts that fall below the government's target of 5.2% growth for this year. In its January 2025 World Economic Outlook Update, the International Monetary Fund (IMF) maintained its forecast for Indonesia's economic growth at 5.1% for 2025. This positioned Indonesia among the faster-growing major economies, second only to India, which was projected to grow at 6.5% in 2025.
Household Consumption to Remain Key Growth Driver
Josua emphasized that household consumption would continue to be the primary engine of growth, backed by controlled inflation and supportive industrial policies. However, he noted that the government must continue fostering investment and maintaining export competitiveness to counter potential slowdowns in global demand.
The economist identified global economic uncertainties as the primary challenge for Indonesia’s growth trajectory. The slowing economies of key trading partners, such as China, have directly impacted Indonesia’s export performance. Additionally, fluctuations in the prices of major commodities, including coal and crude palm oil (CPO), have affected the country’s trade balance.
Indonesia recorded a trade surplus of $31.04 billion in 2024, lower than the $36.89 billion posted in 2023, reflecting the global economic headwinds.
Monetary and Fiscal Policy Outlook
On the monetary front, Bank Indonesia (BI), the country central bank, has maintained a tight policy stance to stabilize the rupiah, which currently trades at around Rp 16,330 per US dollar. Meanwhile, the government has prioritized policies focused on food and energy security, including continued downstreaming initiatives.
“These measures are expected to sustain national industrial competitiveness and attract greater foreign investment,” Josua remarked.
Inflation and Interest Rate Stability in 2025
Domestic consumption remains the cornerstone of Indonesia’s economic resilience, contributing more than 50% to GDP. The Consumer Confidence Index (CCI) remains in optimistic territory, though inflation and labor market dynamics continue to influence spending behavior.
“Stable prices of essential goods and government policies aimed at maintaining public welfare are key factors in sustaining household consumption,” Josua explained.
According to PIER’s analysis, economic growth in 2025 is expected to remain stable despite ongoing global uncertainties and adjustments in monetary policy. Bank Indonesia has kept its benchmark interest rate at 5.75%, aiming to ensure inflation remains within the target range of 2.0%–2.5%.
Josua highlighted several factors that could shape this outlook, including global economic policies, exchange rate stability, and the effectiveness of government initiatives in promoting investment and domestic consumption.
"With both challenges and opportunities ahead, PIER remains committed to providing comprehensive analysis and insights to support better decision-making for businesses and policymakers," Josua concluded.