DIGIVESTASI - The World Bank projects that Indonesia's economic growth will stagnate from 2024 to 2025. According to the Global Economic Prospects report released on January 17, 2025, Indonesia's economic growth is expected to remain at 5.1% for both years.

While growth remains around 5%, the World Bank emphasizes that developing countries must adopt new strategies, including domestic reforms to encourage private investment, expand trade relations, and optimize the efficient use of capital, labor, and energy.

"Many of the factors that previously supported their growth have faded. On the contrary, significant barriers such as high debt, sluggish investment and productivity, and rising costs due to climate change have emerged," said Indermit Gill, Chief Economist and Senior Vice President for Development Economics at the World Bank, on Monday (January 20, 2025).

The World Bank also highlighted the growing role of developing countries in the global economy. "Currently, developing countries contribute about 45% of global GDP, up from 25% in 2000. The interdependence among developing nations has also significantly increased, with over 40% of their goods exports directed to fellow developing countries—double the share in 2000," the report stated.

Moreover, developing nations have become critical players in global capital flows, remittances, and development aid. Between 2019 and 2023, they accounted for 40% of global remittances, up from 30% in the first decade of the century.

In its January 2025 Edition of the World Economic Outlook, the International Monetary Fund (IMF) also projected Indonesia's economic growth for 2024 at 5.1%, consistent with the World Bank’s forecast.

This projection aligns with estimates by Bank Indonesia (BI), which anticipates economic growth in 2024 at the lower end of the 4.7% to 5.5% range, approximately 5.1%. Governor Perry Warjiyo explained that the decline in export growth is driven by weakened demand from major trading partners, excluding the United States.

BI also noted weakened household purchasing power, particularly among the lower-middle income groups, due to unmet income expectations and limited job opportunities. "Household consumption is weakening, particularly among lower-middle-income groups," Perry said during a BI Board of Governors press conference on Wednesday (January 15, 2025).

Meanwhile, Coordinating Minister for Economic Affairs Airlangga Hartarto remains optimistic about the national economic outlook despite the revised forecasts from international agencies and BI.

"It is true that growth projections, including from BI, have been revised downward from 5.2% to 5.1%. However, the government remains optimistic. It's only January; we will monitor developments going forward," Airlangga said on Friday (January 20, 2025).

Airlangga also confirmed that the government would leverage the momentum of Ramadan and Eid al-Fitr to boost consumption, which has been a key driver of Indonesia's economic growth. "In March, we have Eid al-Fitr, and the government will continue to stimulate the consumption sector," he added.

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