# Enhancing Policy Synergy to Foster Indonesia’s Stability and Growth

- Link: https://www.thailand-business-news.com/asean/indonesia/202625-enhancing-policy-synergy-to-foster-indonesias-stability-and-growth
- Published: 2025-03-14T06:26:00+07:00
- Author: News Desk

**Indonesia’s economy grew by 5% in 2024, driven by strong domestic demand. Policymakers
are urged to enhance coordination amid global uncertainties. Structural reforms 
are crucial for long-term growth. Analysts highlight the importance of improving
infrastructure, streamlining regulations, and fostering innovation to sustain this
momentum. Additionally, expanding trade partnerships and boosting investment in 
renewable energy are seen as key strategies to strengthen economic resilience. As
global challenges persist, a balanced approach between fiscal discipline and targeted
stimulus will be essential to maintain stability and support inclusive growth.**

## Economic Stability and Growth in Indonesia

In 2024, Indonesia’s economy experienced solid growth of 5.0 percent, largely driven
by robust domestic demand. Inflation remained within the target band of 2.5±1%. 
However, facing rising global uncertainties in 2025, AMRO urges Indonesian policymakers
to strengthen policy coordination to maintain stability and bolster economic activity.
Structural reforms are deemed crucial for unlocking the long-term growth potential.
Led by AMRO Lead Economist Sumio Ishikawa, the consultation stressed the importance
of policy coordination, with discussions highlighting risks and policy measures 
necessary to support stability and growth.

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## Effective Policy Strategies

Bank Indonesia (BI) initiated policy measures aimed at balancing stability and growth,
including interest rate adjustments and foreign exchange interventions, maintaining
the rupiah’s stability. The policy rate was reduced early in 2025 to stimulate growth.
The government adopted an expansionary fiscal policy, widening the budget deficit
to advance infrastructure projects and new priority programs. These measures included
a free nutritious meal program and higher VAT on luxury goods to boost economic 
momentum. AMRO applauds the planned debt switch and ongoing reforms in tax administration,
highlighting the need for fiscal discipline and effective policy implementation.

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## Challenges and Recommendations

Looking ahead, Indonesia faces short-term challenges, including potential risks 
from global trade tensions and the policies of the new US administration. AMRO suggests
flexible policy recalibration by BI to mitigate such risks. Enhancing revenue mobilization
and reallocating spending to infrastructure and human capital development are deemed
essential. Structural reforms, especially in economic diversification and supporting
local industries, are emphasized for boosting productivity and fostering sustainable
growth. AMRO commends Indonesia’s commitment and hospitality during the mission 
and reiterates the necessity of ongoing regional cooperation to support macroeconomic
stability in the ASEAN+3 region.

Source: [Strengthening Policy Synergy for Indonesia’s Stability and Growth ](https://amro-asia.org/strengthening-policy-synergy-for-indonesias-stability-and-growth)