Indonesia's Economic Projection in 2025: Assessing Supporting Factors and Challenges to Economic Growth

Abstract

This study aims to determine the projection of Indonesia's economic growth in 2025. It employs a literature review to describe the results of various studies, which are then analyzed and presented in a more comprehensive narrative form. The findings of this study reveal that Indonesia's economic projection for 2025 indicates fairly good performance supported by various economic parameters. Predictions from Bank Indonesia, supported by those of global financial institutions such as the World Bank and the International Monetary Fund (IMF), project Indonesia's GDP growth in the range of 4.8% to 5%. Factors supporting Indonesia's economic growth include stable household consumption, increased domestic and foreign investment, export performance supported by product and market diversification, the development of the digital economy and innovation, accommodative and coordinated fiscal and monetary policies, and a demographic bonus along with improved human resource quality. In addition, local and foreign investment remains relatively stable, especially from the downstreaming of natural resources sector. The manufacturing, trade, and service sectors also significantly contribute to economic growth. Several factors challenge Indonesia's economic growth projection, such as global economic uncertainty triggered by various factors including trade wars initiated by the United States, conflicts in various countries, commodity price fluctuations, and potential inflationary pressures from external factors. However, Indonesia's economic resilience, supported by strong macroeconomic fundamentals and a large productive population, provides a basis for optimism in achieving the projected growth targets.