IMF Revises Indonesia's 2025 Economic Growth Projection to 4.8%

The International Monetary Fund (IMF) has revised its economic growth projections for Indonesia in 2025 and 2026. In its World Economic Outlook (WEO) Update July 2025 report, growth is projected at 4.8% for both years.

This projection is a slight increase of 0.1 percentage points from the April 2025 WEO edition, which projected 4.7% for 2025 and 2026.

The upward revision also applies globally. The IMF projects global economic growth of 3% in 2025 and 3.1% in 2026. The 2025 projection is 0.2 percentage points higher, and the 2026 projection is 0.1 percentage points higher, compared to the April 2025 WEO baseline projection.

The IMF states that this upward revision reflects stronger-than-previously-anticipated demand, anticipating higher tariffs, a lower average US effective tariff rate than announced in April, improved financial conditions (partly due to the weakening US dollar), and fiscal expansion in several major jurisdictions.

"Risks to the economic outlook remain tilted to the downside, as reported in the April 2025 WEO," the IMF noted in its report, quoted Friday (August 1, 2025).

According to the IMF, higher effective tariffs could lead to weaker growth. High uncertainty could begin to weigh on economic activity, especially if deadlines for additional tariffs expire without substantive and permanent agreement.

The IMF also notes that geopolitical conflicts could disrupt global supply chains and drive up commodity prices. Larger fiscal deficits—increased risk aversion—could raise long-term interest rates and tighten global financial conditions.

"Combined with concerns about fragmentation, this could reignite volatility in financial markets," the IMF wrote.

On the positive side, the IMF sees the potential for stronger global growth if trade negotiations yield a more predictable framework and tariff reductions.

"Policies need to foster confidence, predictability, and sustainability by de-escalating tensions, maintaining price and financial stability, rebuilding fiscal buffers, and implementing much-needed structural reforms," the IMF stated.