ADB Forecasts Indonesia's Economy to Remain Steady at 5.2% Growth in 2026 Amid Global Turmoil

The Asian Development Bank (ADB) believes the conflict in the Middle East has weakened external demand, increased global uncertainty, disrupted supply chains, and raised input and commodity costs. This has prompted the ADB to revise its economic growth projections downwards for countries in the ASEAN region for 2026. However, for Indonesia, the ADB has maintained its growth forecast, expecting it to be in the range of 5.2% until the end of 2026, higher than the 5.1% projected for 2025. “Indonesia’s prospects remain stable, with unchanged growth forecasts of 5.2% for 2026 and 2027,” the ADB stated in its Asian Development Outlook July 2026 edition. Other ASEAN nations, however, experienced downward revisions. The Philippines saw its growth projection adjusted downwards due to investment delays, weaker private consumption amid higher commodity prices, and climate-related risks. Growth in 2026 is now projected at 3.8%, down from 4.4%, before rising to 5.3% in 2027, slightly below the April forecast of 5.5%. Cambodia experienced a significant downgrade in its outlook amid adverse geopolitical shocks and prolonged border closures with Thailand. Consequently, the growth forecast for 2026 was lowered by 0.4 percentage points to 4.1%, and for 2027 by 0.3 percentage points to 4.7%. Like Indonesia, Malaysia’s growth prospects remained unchanged at 4.6% in 2026 and 4.5% in 2027. Thailand’s growth forecast was also unchanged at 1.8% for 2026 and 2.0% for 2027. Vietnam remains the fastest-growing economy in the region, with its growth forecast maintained at 7.2% for 2026 and 7.0% for 2027. The strong performance across these economies reflects sustained growth in the manufacturing sector, resilient exports and investment, and stable domestic demand. Among the smaller economies, the outlook for the Lao People’s Democratic Republic, Myanmar, and Timor-Leste remained unchanged for 2026 and 2027. Brunei Darussalam’s growth forecast for 2026 was raised from 1.6% to 1.8%, reflecting gains from higher oil prices for this net energy exporter, while the 2027 projection remained unchanged. Nonetheless, risks stem from rising inflation forecasts. Inflation for developing Asia was revised upwards to 3.9% in 2026 from the 3.2% forecast in April.