Market Views 6% Economic Growth Target in 2027 as "Very" Optimistic

Jakarta, CNBC Indonesia - In the macroeconomic assumptions of the 2027 State Budget Draft (RAPBN), the administration of President Prabowo is targeting economic growth of 5.8-6.5% in 2027, with an inflation rate of 1.5-3.5%, an exchange rate of Rp 16,800-Rp 17,500 per US dollar, and a 10-year government bond yield in the range of 6.5%-7.3%.

Panin Asset Management Director Rudiyanto considers the 6% economic growth target in the 2027 RAPBN to be very optimistic. However, the main challenge is how to realise this target, whether through large-scale government spending or from the private sector. This is closely linked to the government’s budget constraints and investor confidence in Indonesia.

In efforts to drive growth through the government’s flagship programmes, Indonesian capital market participants view them as good, but implementation and governance still face obstacles. Therefore, the market believes that government projects should be managed by the private sector with healthy margins and good governance.

Nevertheless, market participants see the commodities and energy sectors as having growth potential amid global sentiment and the government’s flagship programmes.

Regarding the central bank’s monetary policy, Rudiyanto noted that war-related turmoil and inflation spikes are sentiments affecting currency movements and the central bank’s benchmark interest rate policy. Currently, the strengthening of the Rupiah is still heavily influenced by the US dollar index. It is hoped that the government bond yield and Rupiah targets in the 2027 RAPBN can be achieved. Conversely, if the Federal Reserve’s policy changes, the Rupiah and government bond targets in the 2027 RAPBN will be difficult to achieve.