JAKARTA (Xinhua): Economists assessed that the Indonesian government's 5.2 per cent growth target is likely to be achieved by the end of this year, believing that the country's economy is on track toward a bright and optimistic future.
Analysts attribute this outlook to the combined efforts of fiscal and monetary authorities in issuing policies that stimulate economic activity and foster positive investment sentiment.
Bank Indonesia (BI), the country's central bank, has just lowered its benchmark interest rate to 4.75 per cent, while reducing the deposit facility rate by 50 basis points to 3.75 per cent. The move is designed to maintain inflation within the 2025-2026 target of 2.5±1 percent, while boosting consumption and credit demand.
"The lower rate is expected to encourage a decrease in bank credit interest rates and increase credit demand. With that, household consumption and investment are expected to be more enthusiastic in the second half of 2025," said BI Governor Perry Warjiyo.
For the banking sector, the decision is a positive signal, expected to help restore purchasing power and support business expansion.
"We are optimistic that with the combination of monetary stimulus from BI and government fiscal policy, the prospect of credit growth will be stronger, as well as contributing positively to the national economy," said Okki Rushartomo, corporate secretary of state-owned PT Bank Negara Indonesia.
Meanwhile, the Ministry of Finance has stepped up state budget spending, channeling 200 trillion rupiahs (11.97 billion U.S. dollars) through five state-operated banks to spur money circulation, consumption, and real sector activities. The Indonesian Stock Exchange reported that bank shares surged in response, reflecting market optimism.
The government has also rolled out eight-year-end stimulus packages covering food assistance, labor-intensive programs, as well as education and health aid. These measures are expected to drive household spending and further fuel economic activities.
Looking ahead, the 2026 state budget has been set at 3,842.7 trillion rupiahs. The funds will be directed toward eight priority agendas: food security, energy security, free nutritious meals, education, health, rural development through MSMEs, defense, and investment and trade acceleration.
According to Syafruddin Karimi, an economist from Andalas University, these measures will quickly stimulate demand while keeping inflation under control.
"The combination of the policies should have already ignited the economic growth engine, and the impacts will be felt in the fourth quarter of this year, with banks lowering basic lending rates and repricing loans, working capital beginning to decrease, and the financing pipeline moving because government funds are converted into productive credit," he said.
Investment analyst Ekky Topan from consulting firm Infovesta Utama also projected a promising outlook for the stock market through the end of 2025, as government policies continue to strengthen recovery momentum.
"As for psychological impact, investors will believe that the government is consistently maintaining the direction of growth, so domestic risks are relatively manageable. Investors will see that, with this fiscal direction, the government executed the development agenda on a larger scale. The market will be more confident," Topan said. - Xinhua
