December 29, 2025 | 04:32 pm
TEMPO.CO, Jakarta - Indonesia's economic resilience is currently low, edging towards fragile, the Bright Institute reported. This is evident from the weak macroeconomic conditions, narrow-spaced fiscal policies, and a restricted monetary approach. The think tank also warns of sluggish economic growth for the next two years.
"Economic growth is likely to still be in the range of 5 percent, but there's a risk of falling up to around 2.5 percent," said Bright Institute economist Awalil Rizky in a press release quoted on Monday, December 29, 2025.
According to Awalil, the slowdown risk is attributed to the downward trend in household consumption, compounded by the rising cases of layoffs and informal jobs. Additionally, the components of Gross Fixed Capital Formation (GFCF) or investment and exports have not shown significant growth. If both of these variables slow down, it will exacerbate the risk of 2.5 percent growth.
Furthermore, the Bright Institute underscores the worrying fiscal conditions, where, on one hand, tax revenue is having difficulties improving due to the sluggish economy. On the other hand, Awalil mentioned that spending ambitions are growing larger due to various priority programs and the swelling bureaucracy.
"Preventing a widened deficit is increasingly difficult, leading to a growing need for lending," said Awalil, adding that the government's debt burden is increasingly heavy, with a debt service ratio exceeding 40 percent and interest reaching almost 20 percent.
Countries are also facing a worldwide risk of "stagflation," meaning stagnant economic growth paired with high inflation rates. Even major economies like the U.S. and China are at risk of economic slowdown and rising unemployment.
According to Awalil, the combination of relatively fragile economic resilience and high global financial uncertainty makes for high-risk economic conditions for Indonesia. "It is not impossible that Indonesia will partially default on its debt obligations in the second half of 2026 or the first half of 2027," he said.
Previously, Finance Minister Purbaya Yudhi Sadewa was optimistic that economic growth would meet the target of 5.2 percent in 2025 and 5.4 percent in 2026. He even believed that the economy could grow up to 6 percent next year.
The state treasurer claimed that the economic machinery, both fiscal and monetary, is already running. The government is also trying to improve the investment climate. "I still see 6 percent as a possible figure for 2026. despite our assumption of 5.4 percent," said Purbaya at the Ministry of Finance office on Thursday, December 18, 2025.
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