Jakarta, Indoinesia Sentinel — The International Monetary Fund (IMF) has projected global economic growth for 2024 to remain steady at 3.2%, with no anticipated change for 2025. Advanced economies are expected to grow at a slower pace of 1.8% in 2025, while emerging markets and developing economies are forecasted to expand by 4.2%. Indonesia, however, is expected to outpace these averages, achieving a 5.1% growth rate in 2025.
IMF Recognizes Indonesia’s Economic Transformation
In an Instagram post dated December 29, 2024, the IMF lauded Indonesia for its remarkable economic transformation over the last two decades. The nation has quadrupled its GDP to $1.4 trillion and reduced poverty tenfold, with less than 2% of its population now living on less than $2.15 per day. The IMF highlighted Indonesia’s success in maintaining robust economic fundamentals, which it described as a signal to global investors.
“Indonesia’s achievements affirm its resilience and attractiveness as a key investment destination,” noted Indonesia’s Coordinating Minister for Economic Affairs, Airlangga Hartarto, in response to the IMF’s remarks.
Jakarta, Indonesia’s capital city, now records income levels comparable to European nations like Poland and Portugal, reflecting the country’s strides in economic development and urban prosperity.
Asia’s Growth Prospects Amid Challenges
Despite Indonesia’s strong performance, the broader Asian region faces growing risks, including trade tensions, property market issues in China, and potential market volatility. The IMF’s regional outlook, released in November 2024, underscores the critical need for policy adjustments to address these challenges.
China, a major driver of the region’s economy, is expected to grow by 4.8% in 2024 and slow further to 4.5% in 2025, according to IMF projections. The report warns that prolonged economic slowdown in China could negatively impact neighboring economies and the global market.
“China must implement measures to boost domestic demand and stabilize its property sector to mitigate broader economic risks,” the IMF emphasized.
Global Risks and Policy Recommendations
Global economic stability is under threat from geopolitical tensions, tighter monetary policies, and potential trade fragmentation. The IMF warned of escalating retaliatory tariffs among major trading partners, which could exacerbate trade barriers and dampen growth prospects.
Market volatility is another concern. The IMF noted that sudden shifts in policy expectations, such as interest rate adjustments by the U.S. Federal Reserve or the Bank of Japan, could lead to abrupt currency fluctuations, impacting financial markets and eroding investor confidence.
While global monetary policies are expected to ease slightly, supporting private demand, the IMF cautioned that this must be balanced carefully to avoid destabilizing market conditions.
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Indonesia’s Role in Global Economic Recovery
Indonesia’s ability to sustain a higher growth rate compared to global and regional averages reflects its resilience and adaptability. The IMF credited the country’s long-term policy reforms and commitment to economic stability as key drivers of its success.
For investors, Indonesia remains a promising destination, buoyed by its strong economic fundamentals and increasing urban affluence. As the world navigates uncertain economic waters, Indonesia’s achievements stand as a testament to the potential of robust policy-making and strategic transformation.
(Becky)
