The World Bank has released a sobering economic outlook, projecting that 60% of developing countries, including Indonesia, will experience slower growth in 2025. While Indonesia’s economy is still expected to grow, the forecast has been revised downward.
According to economist Aviliani, Vice Chair of the Indonesian Economic Scholars Association (ISEI) and a senior researcher at INDEF, Indonesia’s economy could still grow by around 5% this year. However, she emphasized that if the government aims to meet President Prabowo Subianto’s ambitious 8% growth target, investment clarity and focus must be significantly improved.
“If we want to grow at 8%, then our investment must triple. But the focus is unclear now. We need to prioritize sectors that can generate a multiplier effect,” Aviliani said on June 11, 2025, as quoted by Infobanknews.com.
Aviliani acknowledged that global economic headwinds, including the disruptive effects of former U.S. President Donald Trump’s return to the political stage, have made investors cautious.
“The current disruption is also influenced by Trump’s policies, which have made people take a wait-and-see approach in investment,” she added.
The World Bank’s latest report, released on June 10, 2025, lowered the global growth forecast from 2.7% in December 2024 to 2.4%. Indonesia’s growth projection was revised from 5.1% in January 2025 to 4.7% in June. The outlook for 2026 also remains tepid, with growth adjusted from 5.1% to 4.8%.
Aviliani emphasized that investment should not only be capital-intensive but also labor-intensive to boost employment and improve income distribution. While Indonesia is still seen as an attractive destination, the lack of clear investment direction is causing hesitation among potential investors.
“Ideal investment is the one that creates jobs, not just machines. That way, it raises people’s income and spreads economic growth more evenly. Indonesia could actually seize this moment. Many investors are interested, but we’re never ready with what sectors we want to promote,” she explained.
As a case in point, she mentioned that some investors are interested in building dairy factories to support the government’s Free Nutritious Meals (MBG) program. However, uncertainty about the program’s continuity makes them reluctant to proceed.
“Is MBG going to continue? If the government is serious about MBG or healthcare, then that’s what should be pushed for investment. Or is the focus still on infrastructure?” she asked.
Investment also depends on the role of state-owned enterprises (SOEs), which are crucial to national development programs. Aviliani reminded that SOEs must also maintain financial discipline by repaying bank loans before seeking additional financing.
Regarding household consumption, she noted that spending among middle- and upper-income groups remains stable. However, the government’s stimulus package in the second quarter of 2025 has yet to provide significant momentum to the national economy.
In conclusion, Aviliani urged the government to provide clearer policy direction and investment priorities to capitalize on the current global shifts. Without regulatory certainty and a focused strategy, Indonesia risks missing opportunities to attract much-needed investment.
Source: infobanknews.com, aktual.com
Photo Credit: Kaboompics.com (Pexels)
