Indonesia’s economy grew by 4.9% year-on-year in the first quarter of 2025, despite facing challenging global conditions. The June 2025 Indonesia Economic Prospects (IEP) report, titled People-First Housing: A Roadmap from Homes to Jobs to Prosperity in Indonesia, highlights that strong macroeconomic policies—such as controlled inflation, adequate financial reserves, and adherence to fiscal rules—have supported resilience. These measures helped offset weaker government spending and slowing investment. The growth also benefited low-income groups, although its impact on the middle class was reduced due to slowing consumption.
The report projects average annual growth of 4.8% between 2025 and 2027, driven by rising investment, especially from government housing programs and the launch of the Danantara sovereign wealth fund. However, global trade barriers and commodity price volatility remain key risks. The government is encouraged to strengthen reforms in trade, digitalization, and deregulation to boost the business climate. The housing sector is seen as a major driver of inclusive growth, with a target of building 3 million housing units per year. Public investment is expected to reach around IDR 61 trillion per year, potentially creating 2.3 million jobs and mobilizing private investment worth IDR 45 trillion. The World Bank emphasizes that housing policy should link infrastructure, financing, and disaster resilience to build a stronger, more inclusive economy.
