Economists believe that the economic growth forecasts issued by Bank Indonesia (BI) and the Organisation for Economic Co-operation and Development (OECD) are more realistic than those projected by the government. Recently, the OECD revised its forecast for Indonesia’s economy downward from 4.9% to 4.7%. Similarly, in last month’s Board of Governors Meeting (RDG), Bank Indonesia adjusted its projection by lowering the lower bound of its estimate from 4.7% to 4.6%.

Bhima Yudhistira, Director of the Center of Economics and Law Studies (Celios), considers the OECD’s projection more grounded, especially since the second half of this year presents considerable economic challenges. “The seasonal effect of Eid has passed, so the driver of household consumption is relatively weaker post-holiday,” Bhima told Bisnis on Wednesday (June 4, 2025).

Even though the government is disbursing various incentives and aid programs in June, Bhima assesses that the effectiveness of these stimuli on economic growth remains minimal. As a result, such efforts are unlikely to push economic growth to exceed 5% in the second and third quarters, as expected by the government.

Bhima points out that the Wage Subsidy Assistance (BSU) program does not reach informal workers, whose earnings are mostly below the minimum wage. The BSU is intended for two months—June and July—but will be fully distributed in June 2025 with a total budget of IDR 10.72 trillion. The aid provides IDR 300,000 per person per month to 17.3 million workers or laborers earning ≤ IDR 3.5 million or the regional minimum wage, along with 288,000 teachers under the Ministry of Education and 277,000 under the Ministry of Religious Affairs.

Bhima also views transport and toll fee incentives during the school holiday period as temporary and biased toward middle and upper-income groups. “Take toll discounts or airline ticket incentives for example—they benefit people who can afford to travel. That means the stimulus isn’t universally accessible,” he added.

Reasons Behind OECD's Downgrade of Indonesia's Economic Outlook

In its latest report, OECD Economic Outlook June 2025, the international organization cited several factors weighing on Indonesia’s economy, prompting them to revise the growth forecast down by 0.2% from the previous 4.9% estimate.

According to the OECD, recent weakening in business and consumer sentiment—amid fiscal policy uncertainty and high borrowing costs—is expected to dampen household consumption and private investment in the first half of 2025.

Furthermore, the OECD warned that Indonesia's economy is at risk of underperforming government expectations due to continued capital outflows, driven by both domestic and global policy uncertainties. These outflows could add pressure to the rupiah.

This situation may temporarily widen the current account deficit and trigger inflation through increased import costs. Additionally, rising global trade tensions and falling commodity prices are anticipated to reduce external demand and cut export revenues.

This concern is supported by data from Indonesia’s Central Statistics Agency (BPS) showing that export performance for April 2025 contracted by 10.77% month-to-month (MtM).