OECD Cuts Indonesia's Economic Growth Projection to 4.7%

TEMPO.CO, Jakarta - The Organization for Economic Cooperation and Development (OECD) has lowered its forecast for Indonesia's economic growth down to 4.7 percent, from the previous 4.9 percent.

In response, the Coordinating Minister for Economic Affairs, Airlangga Hartarto, claims that the downward projection is a global phenomenon. "Trade is also slowing down due to the tariff war, or the reciprocal tariffs imposed by the United States," Airlangga said in a virtual press conference from Paris on Wednesday night, June 4, 2025.

According to the minister, tariff war has reduced the economic outlook of several countries by 0.5 to 0.7 percent.

The former Golkar Party chair says the Indonesian government is attempting to sustain the growth by maintaining the people's purchasing power, including through launching five economic stimulus packages. "We also monitor various OECD countries, most of which are also devising packages to maintain the purchasing power of their people in situations like the one we are currently facing," he said.

The OECD is an international organization composed of 38 countries that embrace the principles of representative democracy and free market economy. Indonesia itself has submitted the Initial Memorandum to the OECD as a condition for accession to membership. The document was handed over by Airlangga during the OECD Ministerial Council Meeting 2025 in Paris, France, on June 3, 2024.

On the same day, OECD released its Economic Outlook, where Indonesia's projected economic growth was down to 4.7 percent, compared to the March projection of 4.9 percent.

According to the OECD, low inflation rates and improved financial conditions will spur private consumption and investment in Indonesia. "However, uncertainty about domestic fiscal policy will temper these gains, while export growth is expected to slow amid global trade tensions," the OECD wrote in its report.

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