Looking Towards Indonesia's Economy Aiming for 8% Growth

Amid the clamour of discussions about the future of the national economy, one figure frequently emerges as a symbol of hope as well as a challenge: 8%. This number is not merely a technocratic target in development planning documents, but a representation of a leap towards a more productive, competitive, and globally competitive Indonesia.

Indonesia has a target for Golden Indonesia 2045, which demands an acceleration of economic growth. Moreover, this target is one of the achievements needed for Indonesia to break free from the middle-income trap. However, like every grand ambition, this target raises a fundamental question: is Indonesia truly heading in that direction, or is it still circling in a stagnant growth loop?

To answer this, we need to look back and review Indonesia’s economic journey in recent years. The COVID-19 pandemic became a turning point that shook almost all foundations of the global economy, including Indonesia. In 2020, the national economy contracted by more than two percent, a rare event that reminded us of how fragile the economic system is when faced with a multidimensional crisis.

However, what is interesting is that the post-pandemic recovery occurred relatively quickly. In 2021, the economy began to rebound with growth of around 3.7%, then surged above 5% in 2022. This momentum briefly sparked optimism that Indonesia would enter a phase of higher growth acceleration.

Nevertheless, that optimism seems not yet fully realised. Data from recent years shows a fairly uniform pattern: Indonesia’s economic growth tends to hover around 5%. 2023 recorded around 5.05%, followed by 5.03% in 2024, and a slight increase to around 5.11% in 2025.

At a glance, these figures appear stable and even commendable, especially amid lingering global uncertainties. However, when placed in the context of the 8% target, this stability raises critical questions: are we advancing, or merely surviving?

Stability without acceleration often becomes an unnoticed trap. This stability provides a false sense of security, as if everything is running smoothly, when in fact no fundamental changes are occurring.

In Indonesia’s case, 5% growth is indeed sufficient to maintain macroeconomic stability, curb unemployment, and control social unrest. However, growth at this level is not yet enough to drive the structural transformation needed for Indonesia to escape the middle-income trap. In other words, 5% growth is a condition of “enough to survive, but not enough to leap.”

This is where understanding why the 8% figure is so crucial becomes important. High economic growth is not just about national pride, but directly relates to a country’s ability to create jobs on a large scale, increase productivity, and accelerate capital accumulation.

Countries that have successfully undergone economic transformation, such as South Korea and China, share one commonality: they were able to sustain high growth over a sufficiently long period. That growth became the fuel for industrialisation, innovation, and improvements in human resource quality.

Indonesia actually does not lack the potential to follow in their footsteps. With a large population, abundant natural resources, and a strategic geographical position, Indonesia has all the prerequisites to grow faster. However, potential, without proper management, will never become real strength. This is where the main problem lies: the engines of Indonesia’s economic growth that have been relied upon for years are starting to show signs of fatigue.

For years, household consumption has been the mainstay of the economy. Its contribution to gross domestic product has always dominated, even in crisis conditions. When other sectors weaken, consumption often becomes the last pillar keeping the economy moving.

However, excessive reliance on consumption has long-term consequences. Growth driven by consumption tends to be shallow, as it is not always accompanied by increased production capacity. Household consumption creates demand, but does not always strengthen the supply side.

Furthermore, consumption is highly vulnerable to changes in people’s purchasing power. When inflation rises or incomes stagnate, consumption is immediately pressured. In recent years, pressure on purchasing power has begun to be felt, especially among the middle class. This phenomenon signals that relying on consumption as the main growth engine is not a sustainable strategy.

On the other hand, investment has shown an upward trend, particularly with the aggressive infrastructure development and government efforts to attract foreign investment. Toll roads, ports, airports, and industrial zones are being built on a large scale in the hope of creating multiplier effects for the economy.

However, behind the rising investment figures, questions arise about its quality. Not all investments have the same impact on long-term growth. Investments entering low value-added sectors or those not creating many jobs certainly will not provide optimal contributions.

Exports, as the third growth engine, also face no less complex challenges. Indonesia’s export structure is still dominated by raw or semi-processed commodities, such as coal,