Slowest Quarterly GDP Growth in over Three Years Experienced by Indonesia in Q1
Indonesia's Economic Growth Slows Down
JAKARTA — Indonesia's economic expansion took a hit in the first quarter of 2025, recording a growth rate of merely 4.87%, the weakest performance since Q3 2021. Analysts had predicted a higher growth figure of 4.91%, as per a poll conducted on our site [1].
The Jan-March GDP growth was a noticeable drop from the previous quarter's 5.02%, and on a non-seasonally adjusted, quarter-on-quarter basis, the country's GDP dipped 0.98% [1].
Despite appearances, Indonesia has managed to sustain growth levels around the 5% mark since the onset of the pandemic. However, the current president, Prabowo Subianto, who took office last year, has set a lofty goal of achieving an 8% growth rate during his five-year term [1]. This objective seems challenging, given the hurdles ahead.
President Subianto is grappling with a host of issues – slowing global growth [1], an ongoing trade war [1], and weakening domestic demand [1]. On top of these challenges, the government faces a tightened budget position, which could potentially affect its spending power [1].
Trade relations with the United States could further impact Indonesia's export-oriented economy, as discussions are in the works regarding possible tariffs in the upcoming months [1].
Household spending, responsible for over half of the nation's GDP, grew at a lackluster pace of 4.89% annually [1]. This is the slowest growth rate experienced in five quarters, despite elevated spending during Ramadan and Eid al-Fitr festivities in March [1]. Achieving the desired 8% growth rate might be a tall order with such lackluster consumption patterns.
Investment growth, too, cooled to 2.12%, marking the lowest level in two years [1]. Government spending, on the other hand, contracted during this period [1].
On a brighter note, the net export contribution to GDP increased due to decreased imports, although this might be a consequence of the broader economic slowdown [1].
The mining sector, adversely affected by falling coal prices and weaker international buyer demand, shrank roughly 1% annually [1]. Maintenance work at the Grasberg copper and gold mine, operated by Freeport McMoRan, isalso believed to have impacted the sector's performance [1].
Meanwhile, the agricultural sector provided a ray of hope, with 10.5% growth propelled by stronger rice and corn harvests compared to the previous year [1]. This sector's robust performance bodes well for food security in Indonesia.
[1] Aung, E. (2025). Indonesia's GDP growth slows to 4.87% in Q1 2025. Our Website.[2] Central Statistics Agency of Indonesia (2025). Gross Domestic Product (GDP) of Indonesia. Statistics Indonesia.[3] Nugroho, D. (2025). Indonesia's GDP growth rate slows in Q1 2025. Indonesia Today.[4] Triaga, T. (2025). Indonesia's economic growth rate: A closer look at the underlying factors. The Jakarta Post.[5] World Bank (2025). Indonesia Economic Update, Spring 2025. World Bank Group.
East Asia's financial markets may be closely monitoring Indonesia's economic performance as it strives to achieve an ambitious 8% growth rate, despite slowing global growth, an ongoing trade war, and weakening domestic demand exerting pressure. In the face of these challenges, the government's business decisions and strategic investments could play a decisive role in determining the success, or failure, of Indonesia's economic growth aspirations.
