Indonesia’s economy grew by 4.87% in the first quarter of 2025, according to data released by Statistics Indonesia (BPS). This marks a slowdown compared to 5.11% growth in the same period last year and falls short of the government's target of 5.2% for this year. 

BPS Chief Amalia Adininggar Widyasanti reported that Indonesia’s gross domestic product (GDP) at current prices reached IDR 5,685.9 trillion in Q1 2025. In real terms (constant prices), GDP stood at IDR 3,113.3 trillion. 

"Economic growth in the first quarter was 4.87% year-on-year, and on a quarterly basis, the economy contracted by 0.98%," Amalia said during a press briefing on Monday, May 5. 

Household consumption, a key driver of the economy, grew by 4.89%—a deceleration despite the seasonal boost from Ramadan and Eid al-Fitr. 

Gross fixed capital formation (PMTB), which reflects investment activity, also grew at a slower pace—falling from 3.78% in Q1 2024 to 2.12% in Q1 2025. The slight growth that did occur was driven mainly by investments in machinery, equipment, and vehicles. 

Exports slowed notably, rising just 5.68% compared to a robust 12.66% increase in the same period last year. Meanwhile, imports jumped from 1.48% to 6.78%. 

Despite the overall slowdown, all sectors of the economy posted year-on-year growth—except for the mining sector, which recorded a contraction. 

Amalia also noted that several of Indonesia’s major trading partners continued to grow in Q1 2025, though some experienced slowdowns. The U.S. economy expanded by 2%, down from 2.9% in Q1 2024. South Korea, however, slipped into contraction, shrinking by 0.1% after growing 3.3% in the same period last year. 

China’s economy performed better, growing 5.4%—up slightly from 5.2% a year earlier. Malaysia, Vietnam, and Singapore also showed stronger growth compared to Q1 2024, with gains of 4.4%, 6.9%, and 3.8%, respectively. 

Economic Forecasts Confirm the Slowdown

Teuku Riefky, a macroeconomics and financial markets researcher at LPEM FEB UI, had previously forecast that GDP growth for Q1 2025 would reach just 4.94% year-on-year. He projected full-year growth at around 4.95%, citing global economic conditions as a limiting factor. 

“Given the current domestic situation and global economic pressures, Indonesia is not in a strong position to benefit from the potential fallout of an impending trade war,” Riefky explained. 

Josua Pardede, Chief Economist at Bank Permata, also anticipated moderate growth of 4.91% in Q1 2025. “This reflects a slowdown from the 5.11% growth recorded in Q1 2024, in line with macroeconomic data, business and consumer surveys, and real sector indicators that point to both domestic and external pressures,” he told Katadata. 

He added that household consumption—which makes up the bulk of Indonesia’s economic activity—was estimated to grow by 4.50% in Q1 2025, down from 4.91% a year earlier. 

This article is published in partnership with Katadata 
Original article here