Minister of Finance Purbaya Yudhi Sadewa provides the core reasoning behind President Prabowo Subianto’s ambitious target to accelerate Indonesia’s economic growth to 8 percent, a significant leap from the country’s decade-long average of around 5 percent.

Speaking at the “Gathering of 100 Indonesian Economists” forum at Menara Bank Mega in Jakarta on Tuesday, October 28, 2025, Purbaya said the government’s push for higher growth stems from the belief that Indonesia’s potential growth rate is far above 5 percent.

He argued that the current pace of expansion is insufficient to generate enough formal employment opportunities and raise living standards.

“A 5 percent growth rate isn’t enough to absorb new entrants to the labor force each year. The unemployment rate is falling, yes, but mostly because people are working in the informal sector. That’s not the kind of economy we want to build,” Purbaya said.

He dismissed concerns that faster growth could overheat the economy or fuel demand-driven inflation. He cited that Indonesia’s inflation pressures are cost-push, not demand-pull, meaning they stem from high production and logistical costs rather than excessive consumer demand.

“Demand-pull inflation won’t occur when your growth rate is below potential. People often say Indonesia’s potential growth is 5 percent, but I disagree, it’s higher,” he said.

Targeting 6.7 percent as Minimum Sustainable Growth, Purbaya suggested that Indonesia’s potential growth rate is closer to 6.7 percent, the level needed to effectively absorb new workers into formal, well-paying jobs.

“We must grow at least 6.7 percent to absorb the new labor force into formal sectors. I’m talking about jobs that ensure a secure future, not informal work with little protection,” he said.

To achieve that goal, Purbaya said the government is mobilizing all economic instruments − fiscal, monetary, and private sector initiatives − to push the economy toward a faster and more inclusive expansion.

“We don’t want Indonesians to be stuck in informal work. Everyone should have the chance to thrive in the formal sector, and for that, we must grow faster,” he emphasized.

Post-crisis stagnation

Reflecting on Indonesia’s economic history, Purbaya noted that since the crises of past decades, the country has struggled to exceed 6 percent growth, resulting in limited formal job creation and underemployment among educated workers.

“Many of our graduates are still unemployed or working informally. So don’t be afraid of rapid growth. We need it so that everyone can prosper together,” he said.

Economists have noted that achieving 8 percent growth will require significant structural reforms, including improvements in investment climate, infrastructure, education, and industrial productivity.

Still, Purbaya’s remarks suggest that the Prabowo administration views accelerated growth as a moral and developmental imperative, not merely an economic target.