World Bank Projects Indonesia's Economy to Grow by 4.7 Percent in 2026

Jakarta (ANTARA) - The World Bank projects Indonesia’s economic growth at 4.7 percent in 2026, down from the previous estimate of 4.8 percent, according to the April 2026 edition of the East Asia and Pacific Economic Update released on Wednesday.

This figure is higher than the projected growth for the East Asia and Pacific (EAP) region, which stands at only 4.2 percent. The East Asia and Pacific region includes Cambodia, China, Indonesia, Laos, Malaysia, Mongolia, Myanmar, Papua New Guinea, the Philippines, Thailand, Timor-Leste, Vietnam, and Pacific Island Countries.

The World Bank’s Chief Economist for East Asia and the Pacific, Aaditya Mattoo, stated in an online interview with ANTARA from Jakarta on Wednesday that the region’s outlook is influenced by three main external factors: the conflict in the Middle East triggering rises in energy prices, trade restrictions in the United States as well as global policy uncertainty, and positive developments from the explosion in artificial intelligence (AI) technology.

“We assess Indonesia as relatively resilient because its dependence on oil imports, for example, is lower compared to other countries,” said Mattoo.

Nevertheless, global shocks are believed to still impact Indonesia, particularly through rising oil prices that add to fiscal burdens due to energy subsidies and compensation.

Inflationary pressures are assessed as potentially increasing along with rising oil prices, surges in fertiliser prices that drive up food costs, and increases in semiconductor prices that affect the entire value chain.

Mattoo added that rising global risk sentiment could also pressure investment and consumption.

The recovery is expected to be driven by the operation of the state wealth fund, Danantara, which channels more productive investments, the availability of more private credit through liquidity injections, as well as government efforts to strengthen downstream industries, address obstacles, and attract foreign investment.

The report also highlights that Indonesia’s current growth of around 5 percent per year exceeds the estimated potential growth, largely thanks to government support.

However, reforms such as the removal of non-tariff barriers in the services sector, deregulation, and simplification of business licensing are assessed as able to increase potential growth while creating productive jobs.