Jakarta. The government has set a 5.2 percent economic growth target in the 2025 State Budget Draft, marking the beginning of President Prabowo Subianto’s administration. Outgoing President Joko "Jokowi" Widodo emphasized that the budget will ensure continuity by reinforcing current flagship programs, aiming for stability, inclusivity, and sustainability to boost welfare.

“The 2025 State Budget Draft is based on maintaining inflation at 2.5 percent and targeting a 5.2 percent growth rate. With global economic conditions remaining stagnant, we will rely more on domestic demand,” Jokowi said during the 2024 State of the Nation Address on Friday.

In 2023, Indonesia’s economy grew by 5.05 percent, and the growth for the first half of 2024 compared to the same period in 2023 was 5.08 percent.  In comparison, the IMF projects a 5 percent growth rate for Indonesia in the current and next years, while the World Bank forecasts an average annual GDP growth of 5.1 percent from 2024 to 2026.

To support growth, the government will focus on controlling inflation, creating jobs, and supporting social assistance and subsidies. There will also be efforts to enhance high value-added, export-oriented products with competitive fiscal incentives while ensuring fiscal sustainability.

“The blend of fiscal, monetary, and financial policies will be maintained to accelerate growth and ensure financial stability,” Jokowi added.

The rupiah is expected to trade at around Rp 16,100 per U.S. dollar, with the ten-year government bond yield at 7.1 percent. The Indonesian Crude Price (ICP) is projected at $82 per barrel, with oil production expected to reach 600,000 barrels per day and natural gas production at 1.005 million barrels of oil equivalent per day.

The government also aims to reduce the open unemployment rate to 4.5 percent-5 percent in 2025, down from the current 4.8 percent. Additionally, the poverty rate is targeted to decrease to 7 percent-8 percent from the current 9.03 percent.

The 2025 budget outlines state expenditures of Rp 3,613.1 trillion, including Rp 2,693.2 trillion for central government spending and Rp 919.9 trillion for regional transfers. State revenue is projected at Rp 2,996.9 trillion, comprising Rp 2,490.9 trillion in tax revenue and Rp 505.4 trillion in non-tax revenue.