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View all search resultsGovt insists on growth target as World Bank lowers forecast
Though the World Bank has downgraded its growth projection for Indonesia due to the economic fallout from the Iran war, a move preceded by a similar revision by the OECD last month, the government insists on the achievability of the state budget target.
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Hard decision: Coordinating Economy Minister Airlangga Hartarto (left) and Finance Minister Purbaya Yudhi Sadewa address a press briefing in Jakarta on April 6, 2026, regarding the increase in surcharge for aviation fuel. (AFP/Bay Ismoyo)
T
he government has doubled down on its growth target for gross domestic product, insisting that it will achieve or even exceed the figure set in the state budget despite the shock from the United States-Israel war on Iran, which has prompted the World Bank to downgrade its projection for Indonesia.
Coordinating Economy Minister Airlangga Hartarto told reporters on Thursday that GDP growth this year would be “greater than or equal to” the 5.4 percent targeted in the budget.
However, he added: “All of this will be dependent on the geopolitical conditions, [whether things are] stable or not. The war is still ongoing, [...] so we will certainly adjust accordingly with the dynamics playing out.”
The World Bank, in its East Asia & Pacific Economic Update published on Wednesday, lowered Indonesia’s 2026 growth projection to 4.7 percent from the 4.8 percent it forecast last October, though its 2027 projection puts the country’s economic growth at 5.2 percent.
According to the report, the downgrade is on account of “headwinds” from the Iran war, to which Indonesia is less exposed than other countries in the region. It points to the country’s strategic reserves, domestic refining capacity and commodity export revenues as providing a “natural hedge”, giving Indonesia a “greater capacity to absorb the shock”.
Similarly, the Organisation for Economic Co-operation and Development (OECD) also downgraded its 2026 growth projection for Indonesia to 4.8 percent from 5 percent forecast in December, according to its Economic Outlook published in late March.
For weeks the war has pushed global oil prices beyond US$100 per barrel, far above the $70 assumption in Indonesia’s state budget plan.
