IMF Upgrades Indonesia Growth Forecast to 5.1% Through 2027
IMF upgrades Indonesia to 5.1% growth through 2027 as Prabowo launches $10B Danantara fund at Davos. How Southeast Asia's largest economy is attracting foreign capital.
Indonesian President Prabowo Subianto positioned his nation as Southeast Asia's premier growth market at the World Economic Forum in Davos this week, backed by an upgraded IMF forecast projecting 5.1% GDP growth for 2026.
The IMF upgraded Indonesia's growth forecast from 4.9% to 5.1% for both 2026 and 2027, designating the country as "a global bright spot" while global growth remains at 3.3%. Bank Indonesia projects even higher growth at 5.3%, driven by consumption and investment. The nation has maintained over 5% annual growth for the past decade, supported by a consumer market of 287 million people.
Sovereign Wealth Fund Targets Foreign Investment
Central to Prabowo's pitch is Danantara, a sovereign wealth fund launched in February 2026 with $10 billion in initial deployment. The fund oversees major state-owned enterprises and serves as a co-investment platform for international partners, targeting $1 trillion in long-term assets.
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"Growth requires statecraft and capital, in particular, the efficient allocation and reallocation of capital," Prabowo stated at the forum. "That is why we established Danantara."
The fund prioritizes energy and food security investments to reduce import dependence, while simultaneously welcoming foreign partnerships. Prabowo described Indonesia as "the land of opportunity through Danantara for equal partnerships."
Infrastructure Investments Signal Confidence
Major international companies are backing Indonesia's growth trajectory with substantial infrastructure commitments. Amazon Web Services committed billions to Indonesian digital infrastructure, including hyperscale data centers developed with state telecom provider Telkom.
The Asian Development Bank approved $470 million in financing for renewable energy transition projects, supporting Indonesia's goal of reaching 41% clean power generation by 2040. The country's substantial nickel resources position it as a key player in electric vehicle battery production.
Prabowo also announced a new strategic partnership with the United Kingdom, with negotiations targeting a comprehensive Economic Partnership agreement in 2027 to reduce trade barriers.
Economic Fundamentals Remain Strong
Indonesia's economic resilience stems from domestic demand accounting for 60% of GDP, with household consumption growing 5.04% in the third quarter of 2025. The extreme poverty rate has fallen to 3.5%, supporting continued consumption growth.
The IMF praised Indonesia's fiscal discipline, with the government maintaining its deficit at 3.5% of GDP, below the fiscal cap. Inflation remains controlled at 2.5%, the midpoint of the central bank's target range. Bank Indonesia held interest rates steady this week to maintain currency stability.
However, the IMF noted that economic risks remain "tilted to the downside." Questions about central bank autonomy emerged after Prabowo nominated his nephew as deputy governor.
The Golden Indonesia 2045 vision targets seven to eight percent annual growth through structural reforms. Indonesia's projected 5.1% growth significantly outpaces regional neighbors, which are forecast to grow at 4.4% to 4.5%.
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