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View all search resultsSlow loan growth holding back GDP, INDEF says
An INDEF economist has said the loan growth target must aim for a higher target of 15-16 percent next year rather than 8-12 percent at present to boost GDP.
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A train of the Greater Jakarta LRT service runs along a track on Aug. 5, 2025, against a backdrop of high-rises in the Sudirman Central Business District in downtown Jakarta. (AFP/Bay Ismoyo)
W
eak loan disbursement is hampering efforts to accelerate gross domestic product growth, according to the Institute for Development of Economics and Finance (INDEF), which recommended that the central bank target much higher credit growth.
Eko Listiyanto, an economist at the Jakarta-based think tank, told a media briefing on Monday that the country would fail to reach 6 percent GDP growth in 2026 on an annual loan growth target of just 8 to 12 percent.
Rather, the loan target had to be “at least” 15-16 percent or else economic growth would remain “flat” at the usual pace of around 5 percent year-on-year (yoy), he said.
Eko presented data going back to the 2000s, when the economy grew at 6 percent in tandem with loan growth of over 20 percent.
Nationwide credit growth has dipped to around 7 percent yoy in the first half of 2025, down from the typical double-digit pace, and the government, alongside Bank Indonesia (BI), has been struggling to reel it back up.
When Finance Minister Purbaya Yudhi Sadewa was installed in early September, among the first steps he took was to increase liquidity in the market by moving almost Rp 300 trillion (US$17.9 billion) in state funds deposited with BI to commercial banks. He estimated initially that the move would result in higher loan growth within a month, but the reading continued to go down.
Nevertheless, the minister has expressed optimism that GDP growth would reach 6 percent next year.
