The International Monetary Fund (IMF) has raised its forecast for Indonesia’s economic growth in 2026 to five.1%. The change was described within the January 2026 issue Updated global economic forecasts and Article IV Consultations report published in the identical month.
Despite the upward revision, this figure stays below the Indonesian government’s official economic growth goal for 2026.
Previously, the IMF projected that Indonesia’s economy would grow by 4.9% in each 2025 and 2026, as stated within the October 2025 release of the report. World economic prospects. In its latest update, the IMF now forecasts economic growth of 5.0% in 2025, rising to five.1% in 2026 and 2027.
Between optimism and political risks
In its January 2026 Article IV ConsultationsThe IMF noted that Indonesia’s economy has demonstrated resilience to varied external shocks.
“Economic growth is expected to remain steady at 5.0% in 2025 and 5.1% in 2026, despite a challenging external environment, reflecting support from fiscal and monetary policies,” the IMF said in its report.
The IMF also assessed that headline inflation in Indonesia remained at a very good level and was forecast to stay around half of the official goal range. Furthermore, the present account deficit is predicted to be manageable in 2025-2026, supported by foreign exchange reserves that the IMF deems adequate.
The stability of the financial sector can also be perceived to be maintained. However, the IMF cautioned that continued vigilance is required regarding the standard of banking assets, especially as various post-pandemic regulatory easing measures are step by step phased out.
Nevertheless, the IMF highlighted several risks that might impact economic performance. On the external front, rising global trade tensions, policy uncertainty and volatility in international financial markets remain the major risk aspects.
At the country level, the IMF has warned that major policy changes made without strong safeguards could increase economic instability.
Gap to government growth targets
The IMF projection stays below the Indonesian government’s official goal. The government has set an economic growth goal of 5.4%. for 2026.
Meanwhile, Finance Minister Purbaya Yudhi Sadewa had previously expressed optimism that Indonesia’s economy could grow by as much as 6 percent in 2026.
President Prabowo Subianto also expressed confidence that Indonesia’s economic growth will exceed expectations. In his speech on the World Economic Forum (WEF) in Davos, Switzerland on Thursday, January 22, 2026, Prabowo emphasized that Indonesia’s economic conditions remain stable and well-managed.
“I am sure that our growth – our economic growth – will significantly surprise many around the world,” Prabowo said.
He added that Indonesia’s economy has consistently grown above 5 percent lately and annual inflation has been kept under control at around 2 percent.
Strong growth in a slowing world
In the worldwide context, the IMF also revised upwards its projection of world economic growth in 2026 to three.3%. from previous estimates of three.1 percent. The revision was driven by fiscal stimulus, more accommodative monetary policy and a surge in investment in technology, including artificial intelligence (AI). For 2027, the IMF maintained its global growth forecast of three.2%.
Among emerging economies, Indonesia’s growth prospects remain relatively good. In 2026 and 2027, Indonesia’s growth rate is predicted to be comparable only to the Philippines (expected to grow by 5.6% in 2026 and 5.8% in 2027) and India, which is predicted to grow by 6.4%.
On the opposite hand, China is predicted to decelerate, with economic growth expected to say no from 5.0% in 2025 to 4.5% in 2026 and 4.0% in 2027. Malaysia and Thailand are also expected to experience lower growth rates than Indonesia.
Compared to the World Bank, the IMF’s forecasts are broadly consistent. In the January 2026 issue Global economic prospectsThe World Bank forecasts that the Indonesian economy will grow by 5.0% in 2026 and can reach 5.2% in 2027. The World Bank attributes this growth to government fiscal stimulus and state-led investment.
Political discipline under pressure
The IMF stressed the importance of maintaining coherent fiscal and monetary policies to guard macroeconomic stability. A gradual normalization of macroprudential policy is taken into account needed to make sure healthy credit growth is maintained without generating systemic risk.
Moreover, deregulation and structural reforms are considered crucial to draw foreign direct investment from outside the commodity sector.
The IMF also stressed the necessity to improve the standard of human capital, strengthen productive sectors and expand digital transformation, including amongst micro, small and medium-sized enterprises (MSMEs), to extend their contribution to gross domestic product in a more performance-based manner.
Greater openness in international trade integration is predicted to strengthen the competitiveness of the domestic manufacturing industry.
With growth forecast at 5.1% in 2026, the IMF ranks Indonesia amongst economies showing stable performance within the face of world uncertainty. However, achieving growth above this level will still rely on the effectiveness of policy implementation and the federal government’s ability to strike a balance between economic stability and expansion.
