OECD Predicts Indonesia's Economic Growth To Reach 5.2% In 2025

Doc: Euronews.com

OECD Predicts Indonesia's Economic Growth To Reach 5.2% In 2025

Wednesday, 27 Nov 2024

The Organisation for Economic Co-operation and Development (OECD) projects that Indonesia's economy will grow by 5.2% annually by 2025. This figure surpasses the forecasts made by both the International Monetary Fund (IMF) and the World Bank. This projection is detailed in the latest report titled "OECD Economic Surveys: Indonesia, November 2024."

According to the report, the OECD anticipates that Indonesia's economic growth will reach 5.1% throughout 2024, increasing to 5.2% in 2025. However, the OECD notes that three significant events could lead to substantial changes in these projections. First, a surge in food and energy prices could result in higher living costs and increased subsidy expenditures. Second, a potential exodus of investors from emerging markets could lead to a decline in investment realization and capital outflows.

Third, natural disasters, which frequently occur in Indonesia, could further strain the government's fiscal burden. To mitigate the adverse effects of these events, the OECD recommends three policy measures. First, reforming the subsidy distribution scheme to direct support to recipients rather than goods.

Second, maintaining prudent debt financing and ensuring adequate foreign exchange reserves. Third, integrating climate factors into financial resilience testing and regulations, while expanding insurance coverage to the population. Overall, the OECD views Indonesia's economy as having recovered from the impacts of the Covid-19 pandemic. Nevertheless, the country is currently facing uncertainties in the global economic landscape.

Consequently, the institution comprising numerous developed nations emphasizes the necessity of maintaining prudent monetary and fiscal policies to uphold Indonesia's macroeconomic stability. "In the long term, government revenue must be increased to meet the growing needs of society and to address challenges posed by climate change and an aging population," states the OECD report, cited on Tuesday, November 26, 2024.

In comparison, the International Monetary Fund (IMF) in its October 2024 edition of the World Economic Outlook forecasts Indonesia's economic growth at 5.1% for 2025, with this figure expected to remain stagnant until 2029. Similarly, the World Bank's October 2024 edition of the East Asia and Pacific Economic Update also projects Indonesia's economic growth at 5.1% for 2025. Meanwhile, in the 2025 State Budget Law, the government itself anticipates Indonesia's economic growth to reach 5.2% in the coming year. (ferry@insightinnews.com)

Tag:

We would appreciate your comments

Business_Economy