World Bank Lowers Indonesia’s 2026 Growth Forecast to 4.7%

The World Bank has lowered its economic growth forecast for Indonesia for 2026 to 4.7 percent, according to the April 2026 edition of the East Asia and Pacific (EAP) Economic Update released on April 9, 2026. This revised projection is a decrease from the previous estimate of 4.8 percent issued in October 2025.

The downward revision follows a period where Indonesia’s most recent economic growth rate stood at 5.1 percent. The World Bank attributes the slower 2026 outlook to headwinds created by rising oil prices and a risk-off sentiment characterized by heightened investor caution in global financial markets.

Regional Economic Slowdown

The slowdown in Indonesia is part of a broader trend across the East Asia and Pacific region. The World Bank projects that regional growth will ease to 4.2 percent in 2026, down from 5.0 percent in 2025.

Carlos Felipe Jaramillo, World Bank Vice President for East Asia and Pacific, stated that energy shocks resulting from the conflict in the Middle East are exacerbating the negative impacts of rising trade barriers, global policy uncertainty and domestic economic difficulties.

Regional growth is projected to slow to 4.2% in 2026 from 5.0% in 2025, as energy shocks from the Middle East conflict exacerbate the adverse impacts of rising trade barriers, global policy uncertainty, and domestic economic difficulties

Carlos Felipe Jaramillo, World Bank Vice President for East Asia and Pacific

The EAP region includes Cambodia, China, Indonesia, Laos, Malaysia, Mongolia, Myanmar, Papua New Guinea, the Philippines, Thailand, Timor-Leste, Vietnam, and Pacific Island Countries. Despite the slowdown, the World Bank noted that growth in this region continues to outpace much of the world.

China, the largest economy in the region, is expected to see growth slow from 5.0 percent in 2025 to 4.2 percent in 2026 and 4.3 percent in 2027. This decline is attributed to weak domestic demand, ongoing challenges in the property sector, and a global slowdown that is curbing export growth.

Other parts of the region are projected to slow to 4.1 percent in 2026, with a forecasted recovery to 5.0 percent in 2027 as geopolitical tensions ease and uncertainties diminish.

Outlook for Indonesia and Future Recovery

While the 2026 forecast has been trimmed, the World Bank expects Indonesia’s economy to rebound in the following year. Growth is projected to rise to 5.2 percent in 2027.

This projected recovery is expected to be supported by two primary factors: investment from Danantara and a more accommodative monetary policy.

Aaditya Mattoo, World Bank Research Group Director, noted that while the region has demonstrated remarkable resilience in the past, the current economic conditions could increase burdens and hinder productivity growth.

The region’s resilience in the past has been remarkable, but current challenges can increase economic burdens and hinder productivity growth

Aaditya Mattoo, World Bank Research Group Director

The updated projections highlight the vulnerability of the region to external shocks, particularly those stemming from geopolitical conflicts and the resulting volatility in energy markets.