INDEF Urges Government to Adopt Outward-Looking Policies to Achieve 8% Growth

Senior Economist at the Institute for Development of Economics and Finance (Indef), Didik J. Rachbini, has criticised the economic policies under Prabowo Subianto’s leadership, describing them as inward-looking and neglectful of the external sector. Didik argued it is time for the government to transition to an outward-looking perspective.

“The weakness, shortcoming, or even error in economic policy regarding efforts to increase economic growth is primarily just one thing: neglecting the external sector. All efforts and dynamics so far have been too inward-looking. Only the domestic sector is packaged with various policy controversies, yet the result remains moderate growth of around 5 percent,” Didik said in a statement on Sunday (9/8/2026).

He assessed that government spending will not be sustainable as it merely acts as a buffer to prevent economic growth from falling below 5 percent. Moreover, the fiscal side also has problems in terms of both revenue and expenditure, so it will not last long and can only provide support in the very short term.

In addition, the factor of public consumption can no longer be fully relied upon. The middle class has been eroded and its numbers have declined, thereby hampering economic growth from the consumption side.

Didik noted that Indonesia, with its large population, indeed has a large domestic market. However, the issue is not just relying on large domestic consumption, but ensuring Indonesian businesses can move up a class because they are forced and given the opportunity to compete in the global market.

“This is where outward-looking policy becomes important because it can encourage Indonesia to exist in global competition with the hope of obtaining large foreign exchange earnings,” he said.

He argued that if inward-looking policies continue, economic growth is predicted not to be higher than what is achieved now. This must be realised because the export factor has not yet become a strong enough growth engine to drive industrial transformation.

For a country as large as Indonesia, the domestic market is indeed important, but the domestic market alone is not enough to produce world-class industrialisation. “To get there, there is no other way but to manage the external sector with export-oriented policies,” he stressed.