Why the IMF Cuts Indonesia's Growth Projection to 5 Percent

The International Monetary Fund (IMF) has cut its projection for Indonesia’s economic growth to 5 percent from the previous forecast of 5.1 percent. The IMF has also lowered its global economic growth projection to 3.1 percent from the earlier prediction of 3.4 percent.

In its report, the IMF states that economies worldwide are impacted by the Middle East conflict through rising commodity prices, inflation, and financial market sentiment. “Developing countries and commodity-importing nations face heavier risks, with currency depreciation exacerbating the impact of higher energy and food prices,” the IMF writes in its report, quoted on Thursday, 16 April 2026.

In an adverse scenario, the IMF predicts oil prices could rise 80 percent in the second quarter of 2026, or around US$100 per barrel, before falling 20 percent in 2027, or about US$75 per barrel. Oil prices in Europe and Asia are projected to potentially increase by up to 160 percent. Meanwhile, food prices are expected to surge by 2.5 percent.

In a severe scenario, global oil prices are estimated to jump up to 100 percent, or around US$110 per barrel in the second quarter, and remain high at US$125 per barrel in 2027. Under those conditions, oil prices in Europe and Asia are projected to rise 200 percent. Food prices are expected to increase by 5 percent in 2026 and 10 percent in 2027.

The IMF also predicts that global trade volume could decline from 5.1 percent in 2025 to 2.8 percent in 2026. However, the figure will rise to 3.8 percent in 2027. “This dynamic reflects the widespread imposition of tariffs at the outset and their impact being mitigated by adjustments in trade relationships and supply chains over time,” the IMF writes.