The World Bank's Indonesia Economic Prospects report indicates a positive trajectory for Indonesia's economy over the next two years, driven by domestic consumption and investment. Despite challenges in the export sector, the economy is expected to grow steadily, with a projected expansion of 5.1 percent in 2025 and 2026, following a 5 percent growth in 2024. The report highlights the significant role of household spending and election-related expenditure in driving the country's economic expansion, particularly evident in the 5.11 percent growth recorded in the first quarter of 2024.

The World Bank's assessment acknowledges potential headwinds, including the impact of worsening terms of trade, high interest rates, and geopolitical shocks, which could further affect the export sector. However, the report emphasizes the stability of the economic outlook, contingent on policy continuity, particularly in measures aimed at boosting investment.

The projected growth is underpinned by expectations of increased public consumption and a return of foreign direct investment to pre-pandemic levels. The report also highlights the positive impact of Indonesia's fiscal rule in attracting investments and reducing risk premiums.

While the economic outlook remains stable, the report underscores the need to address potential downside risks and maintain policy measures aimed at enhancing investment. The upcoming government transition and the formulation of the 2025 budget are expected to provide further clarity on the economic policy direction and fiscal stance.

Overall, the World Bank's report presents a cautiously optimistic outlook for Indonesia's economy, emphasizing the importance of sustained policy measures and investment to support the country's economic growth.