IMF Downgrades Indonesia's Economic Growth Forecast to 4.7%

April 24, 2025 | 10:59 am

TEMPO.CO, Jakarta - The International Monetary Fund (IMF) projects Indonesia's economic growth at 4.7 percent for 2025 and 2026. This figure decreases from the January 2025 projection of 5.1 percent. The projection is outlined in the April 2025 edition of the World Economic Outlook report, which analyzes the impact of U.S. tariff adjustments.

In its report, the IMF stated that emerging Asian countries, particularly those in the Association of Southeast Asian Nations (ASEAN), are among the most affected by the tariffs (imposed by the United States. The projected economic growth for emerging Asian countries in 2025 and 2026 is 4.6 percent.

Indonesia’s projected economic growth figures are not significantly different from many developing Asian countries. Malaysia, for instance, is expected to grow by 4.1 percent in 2025 and 3.8 percent in 2026. Meanwhile, Vietnam is projected to grow by 5.2 percent in 2025 and 4.0 percent in 2026. As for China's economy is forecasted to grow by 4 percent in both 2025 and 2026.

The impact of the U.S. reciprocal tariffs is not limited to Indonesia, it also affects the global economy. Global economic growth in 2025 is projected to decline to 2.8 percent, down from the January 2025 forecast of 3.3 percent.

In a press statement on Tuesday, April 22, 2025, IMF Research Department Director Pierre-Olivier Gourinchas said that apart from rising tariffs, increasing policy uncertainty also plays a major role in the economic outlook. If it continues, escalating trade tensions and uncertainty will significantly slow economic growth.

Meanwhile, Bank Indonesia Governor Perry Warjiyo stated that U.S. reciprocal tariff policies are affecting both the trade and financial channels.

From the trade perspective, Perry stated that imposing Trump's tariffs will directly affect Indonesia's exports to the U.S. and the U.S. economy, as demand for exports is expected to decline.

He predicted that not only will U.S. economic growth slow this year, but market participants are forecasting a 60 percent chance of a U.S. recession. In addition, U.S. inflation is also expected to rise.

The central bank also highlighted the indirect impacts from the trade side, as there will be risks of declining Indonesia’s exports to China. China's economic growth is also expected to slow this year. “But it’s not just China, other countries too. Whether it's India or other countries, we are likely to see a slowdown in economic growth,” Perry said, as quoted by Antara.

Therefore, Bank Indonesia predicts that Indonesia’s economic growth in 2025 will be slightly below the midpoint of the 4.7-5.5 percent range. “Until the first quarter of 2025, our economy is performing well. But moving forward, we need to better anticipate these dynamics. And that’s why Bank Indonesia is committed to continuously strengthening and improving the monetary and macroprudential policy mix,” Perry said.

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