CEO Morning Brief

Indonesia Lowers 2025 GDP Growth Expectation to 5.1%-5.5%

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Publish date: Tue, 21 May 2024, 10:51 AM
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TheEdge CEO Morning Brief

JAKARTA (May 20): Indonesia's government expects economic growth in 2025 to be within a range of 5.1% to 5.5%, Finance Minister Sri Mulyani Indrawati told parliament on Monday, slightly below a previous forecast range of 5.3% to 5.6%

The growth outlook, along with predictions on bond yields and rupiah exchange rate, were discussed as the basis of the government's 2025 budget.

Outgoing President Joko Widodo will firm up the figures and present the 2025 budget to parliament in mid-August and lawmakers are expected to debate the plans in the month after, even though successor Prabowo Subianto will take over in October.

Officials have said president-elect Prabowo's transition team is working with the finance ministry so that the 2025 budget will reflect his plans after taking office.

Sri Mulyani said new initiatives on nutrition improvement for school children, Prabowo's flagship programme, will be part of the 2025 fiscal plans, but did not offer details.

Some analysts have warned about the high cost of Prabowo's signature campaign pledge to give free meals to 83 million children, saying it could undermine Indonesia's track record of fiscal discipline.

His team in February estimated it could cost US$7.7 billion (RM36.1 billion) in its first year. Prabowo's camp says it could spur growth by as much as 2.6 percentage points when fully implemented by 2029.

Despite the downgrade in GDP growth outlook, the government will design next year's budget with a deficit plan of between 2.45% to 2.82% of GDP, close to the previously given range of 2.48% to 2.80% of GDP.

Source: TheEdge - 21 May 2024

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