INDEF Highlights Wide Gap Between 8 Per Cent Economic Growth Target and Realisation
The Institute for Development of Economics and Finance (INDEF) believes there is a wide gap between the 8 per cent economic growth target set by President Prabowo Subianto and Indonesia’s actual economic growth over recent years. INDEF views this target as ambitious, necessitating extra effort and the identification of new sources of economic growth.
INDEF Executive Director Esther Sri Astuti stated that Indonesia’s average economic growth for the 2021-2025 period has only been around 4.8 per cent. This implies a gap of approximately 3.2 percentage points that must be closed to reach the 8 per cent target.
“If we are talking about 8 per cent economic growth, we certainly need extra effort,” Esther said during the ‘Sarasehan 100 Ekonom’ seminar in Jakarta on Thursday (3/9/2026).
According to her, the government cannot rely solely on conventional sources of economic growth to chase this target. The government needs to find new growth engines capable of driving higher economic activity.
The challenges in reaching this target do not only originate domestically. Esther noted that geopolitical conflicts and trade fragmentation are several external factors that also influence the Indonesian economy.
“This means we must seek new sources of economic growth, not just conventional economic growth,” she added.
Regarding the financial sector, INDEF observes that there is still room to strengthen its contribution to economic growth. While credit growth has reached double digits, its distribution has not yet fully reached all scales of business.
INDEF noted that credit growth reached approximately 13.58 per cent, whereas SME (UMKM) credit grew by only about 1.1 per cent. This condition indicates that banking intermediation has not yet covered all business scales, particularly SMEs.
Therefore, Esther believes the role of the Financial System Stability Committee (KSSK) should not be limited to maintaining financial system stability. The financial sector must also be ensured to provide a larger contribution to economic growth, especially when the government sets such a high growth target.