Indonesia’s Finance Minister calls World Bank GDP growth downgrade a 'serious mistake'

JAKARTA: Indonesia’s Finance Minister Purbaya Yudhi Sadewa has pushed back against the World Bank’s decision to lower the country’s 2026 economic growth forecast from 4.8 per cent to 4.7 per cent, calling it a “serious mistake” that could undermine market and investor confidence in the country, according to local media reports.

In February, Indonesia’s Coordinating Minister for Economic Affairs Airlangga Hartarto had said that the country’s economy has the potential to grow by 5.6 per cent this year, above its official target of 5.4 per cent. 

Speaking to local reporters at the Finance Ministry on Thursday (Apr 9), Purbaya said that the World Bank's revised projection is “imprecise” and does not reflect the government’s data, which he said, point to strengthening economic conditions rather than a slowdown.  

Purbaya attributed the lower forecast partly to assumptions of high global oil prices, saying that such conditions will not last long and that projections will improve as energy prices normalise.

“The World Bank has created a negative sentiment about us. I’ll wait for their apology when oil prices return to normal levels and they revise their economic projections again,” Purbaya said, as quoted by news outlet Kompas. 

He added that Indonesia’s economy is expected to grow between 5.5 and 5.6 per cent in the first quarter of 2026 alone, suggesting that the World Bank’s full-year projection implies a sharp downturn in the remaining quarters. 

“The World Bank is assuming we will plunge into a deep slowdown after (the first quarter) … I think they have miscalculated,” he added, reported Kompas. 

He added that the government will continue optimising all available instruments to sustain the country’s economic momentum. 

“It’s possible the World Bank could turn out to be right later, but I do not know. What’s clear from my figures is that things are continuing to improve and we will keep it that way,” he said, as quoted by Kompas.

WORLD BANK’S PROJECTION SHOULD NOT BE OVERINTERPRETED, SAYS ECONOMIC AFFAIRS MINISTER

In its April 2026 East Asia and Pacific Economic Update, the World Bank lowered Indonesia’s growth forecast to 4.7 per cent, down from 4.8 per cent it projected in October last year, citing external pressures including higher global oil prices and increased investor caution in international financial markets. 

However, the World Bank also noted that some of the pressures could be cushioned by commodity revenues and government-led investment initiatives, adding that Indonesia still has economic buffers including commodity exports that could help absorb the short-term impact of higher energy costs, according to local news outlet Tempo. 

Unlike Purbaya, Airlangga described the downgrade as part of a broader global phenomenon, noting that many countries are experiencing similar revisions due to geopolitical tensions and wars weighing on the global economy.

“If we look at the figure, it is still above the global average growth, which is around 3.4 per cent,” he said on Thursday, adding that this reflects strong economic fundamentals. 

Airlangga cautioned against overinterpreting the World Bank’s projection, saying that such forecasts are based on assumptions and may not fully reflect conditions on the ground.

“They have their own estimates but in many cases, our actual results have been better than their predictions, " he said.

In 2025, Indonesia’s economy grew by 5.11 per cent year-on-year, exceeding the World Bank’s projection of 5 per cent, according to IDN Financials. 

He also said that the Indonesian government will not interfere with or intervene in projections made by international institutions. “We don’t need to intervene,” he said.