World Bank Revises Indonesia's Economic Forecast Upwards to 5.2 Per Cent
The World Bank has revised its economic growth projection for Indonesia in 2026 upwards to 5.2 per cent. This figure represents a 0.5 percentage point increase compared to the previous projection, which stood at 4.7 per cent.
This revision is featured in the October 2026 edition of the East Asia and Pacific Economic Update report. The World Bank assessed that the impact of rising energy prices on the Indonesian economy is expected to be lighter than previously anticipated.
“Indonesia’s growth is projected to remain stable at 5.2 per cent in 2026 and 2027. This figure represents a 0.5 percentage point increase in the 2026 projection, as the impact of rising energy prices is milder than expected,” the World Bank stated in the report, as cited in Jakarta on Tuesday (6/10/2026).
The World Bank also noted that the government’s policy mix is supporting economic growth in the short term. However, these policies are simultaneously contributing to a widening of fiscal and external imbalances.
Indonesia’s current account deficit is projected to widen to 1.5 per cent of Gross Domestic Product (GDP) in 2026. Meanwhile, as fiscal stimulus decreases, medium-term economic growth is expected to become increasingly dependent on private investment.
Regarding prices, inflation is projected to remain near the upper limit of the central bank’s target range.
The World Bank’s Chief Economist for Asia, Franziska Lieselotte Ohnsorge, stated that domestic demand remains the primary pillar of Indonesia’s economic growth. “What is truly strong in Indonesia’s economy is domestic demand. That is what supports Indonesia’s economic growth, and this is what slightly differentiates it from other countries in the region (Asia),” Franziska said during a virtual media briefing held in Jakarta on Monday.
Indonesia’s growth projection of 5.2 per cent is also above the average growth for the East Asia and Pacific region, which is expected to reach 4.5 per cent. The regional projection has risen from the World Bank’s April 2026 estimate of 4.2 per cent.
The increase in Indonesia’s projection aligns with economic performance in the first half of 2026. The World Bank noted that the Indonesian economy grew by 5.4 per cent in the first semester of 2026, an increase from the 5.1 per cent growth recorded in 2025.
This growth primarily reflects strengthening private consumption and increased government spending around the turn of the year. The earlier occurrence of Ramadan and Eid al-Fitr, the accelerated disbursement of religious holiday allowances (THR) for civil servants, and the accelerated implementation of the Free Nutritious Meal programme were also cited as factors influencing expenditure in early 2026.