Indonesia Sets Ambitious 2027 GDP Growth Target of 5.9% to 7.5% as Economy Shows Momentum

JAKARTA, May 7 (Reuters) — Indonesia has set an ambitious economic growth target of between 5.9% and 7.5% for 2027, as the government looks to sustain a post-pandemic recovery and accelerate structural reforms, Planning Minister Rachmat Pambudy announced on Thursday.

Unveiling the government's 2027 working plan, Pambudy said the target would be underpinned by stronger investment flows, higher industrial output, and productivity improvements across key sectors. The plan serves as a blueprint for ministries to align their policies and spending priorities for the coming year.

The announcement comes on the heels of stronger-than-expected first-quarter data, which showed the economy grew 5.61% year-on-year — its fastest pace in more than three years. That performance has bolstered confidence that Southeast Asia’s largest economy can build on its recovery trajectory.

For 2025, the government is targeting growth of 5.4%, with an optimistic scenario of 6%, up from last year’s 5.11%. The 2027 range, however, marks a significant leap, reflecting the administration’s long-term ambitions to transform the economy through industrialization and higher-value exports.

Budget discussions with parliament typically begin mid-year, and the working plan will be central to shaping fiscal policy and sectoral allocations.

Mixed reactions from analysts and the public

While the target has been welcomed by some as a signal of intent, others remain skeptical given structural challenges such as regulatory bottlenecks, infrastructure gaps, and global economic uncertainty.

“This is a bold vision, but without serious reform in labor laws and investment certainty, 7.5% is just a number on paper,” said Andi Pratama, a Jakarta-based economist. “We’ve seen ambitious targets before, but execution has always been the weak link.”

In contrast, Rina Sulistyo, a small business owner in Surabaya, was more blunt: “Honestly, I’ll believe it when I see it. Prices are going up, wages are flat, and small businesses are still struggling. This feels like a fantasy for people like me.”

However, David Hartono, a financial analyst in Singapore, said the target was not unrealistic if Indonesia could attract more foreign direct investment in downstream processing and digital infrastructure. “The mining and EV battery sectors are booming. If they can replicate that in other industries, 6.5% to 7% is achievable,” he said.

The government has yet to detail specific policy measures to reach the upper end of the target range, but officials have signaled a focus on deregulation, export diversification, and human capital development.