World Bank Projects Indonesian Economy Will Remain Strong, Growing By An Average Of 4.8% Until 2027

The World Bank projects that Indonesia's economic growth will remain strong amid global uncertainty, including the escalating conflict in the Middle East. 

The World Bank said that strong macroeconomic policies—such as low inflation, sufficient financial reserves, and disciplined fiscal rules—have greatly helped strengthen Indonesia's economic resilience. These efforts have been able to manage the decline in government spending and slow investment. 

This economic growth has been most beneficial for low-income groups, but is still less felt by the middle class as reflected in slower consumption growth for prospective households in this group. Going forward, it is important to focus on creating better jobs and maintaining middle-class living standards. 

"Indonesia's current economic performance reflects strong foundations and good policy responses," said Carolyn Turk, World Bank Division Director for Indonesia and Timor-Leste in the June 2025 edition of the Indonesia Economic Prospects (IEP) report entitled People-First Housing: A Roadmap from Homes to Jobs to Prosperity in Indonesia, Monday (23/6). 

“To maintain this momentum, our study suggests that structural reforms that improve efficiency and productivity could drive higher growth, reverse the trend of declining productivity, and create more and better jobs,” he said. 

The report forecasts Indonesia’s economy to grow by an average of 4.8 percent per year during 2025–2027. Investment is expected to pick up, driven by the government’s housing program and the launch of a new sovereign wealth fund, Danantara. 

wever, there are risks from challenges related to global trade and commodity price fluctuations. The government’s focus on deregulation, a more conducive business climate, and trade and digital reforms could help address these risks and drive growth to 5.5 percent per year by 2027. These reforms are also in line with the government’s priority program to boost demand. 

The report highlights the potential of the housing sector as a driver of inclusive growth. The government’s target to build 3 million housing units per year is in line with its “people-oriented” strategy. With a public investment of USD 3.8 billion per year, the program could create more than 2.3 million jobs and mobilize USD 2.8 billion in private investment, while improving the quality of life and economic opportunities for millions of citizens. 

Tag: Carolyn Turk Indonesia Indonesia Economic Prospects