![Indonesia slows down – GDP growth lowest in over three years [World News]](https://foodcom.pl/wp-content/uploads/2025/03/News-world_20-1520x760.png "Indonesia slows down – GDP growth lowest in over three years [World News]")
- Indonesia’s GDP growth slowed to 4.87% in the first quarter of 2025, the lowest level in over three years.
- Consumption and investment weakened, indicating a marked deterioration in domestic demand.
- External factors, including trade tensions with the US and the threat of new tariffs, are worsening export conditions.
- The only strong sector remains agriculture, which grew by 10.5% thanks to a successful harvest.
Weaker economic growth and external pressures weaken outlook
Indonesia’s economy grew by just 4.87% year-on-year in the first quarter of 2025 – the slowest growth rate since Q3 2021. This result was slightly lower than the previous quarter (5.02%) and close to analysts’ forecasts (4.91%). This slowdown is due to both global trade tensions and weakening domestic demand.
President Prabowo Subianto, who took office in 2024, has announced that he will raise economic growth to 8% during his term, but his administration is already facing difficulties: trade tensions with the US, budget constraints and lower household spending are the main challenges. Exports to the US could be further undermined by new tariffs that Indonesia is trying to avoid in talks with Washington.
Consumption slows, but agriculture offers hope
Consumer spending, which accounts for more than half of Indonesia’s GDP, grew by only 4.89% year-on-year in Q1, the slowest pace in five quarters. While spending on transport and catering remained strong (also thanks to Ramadan falling in March), clothing and footwear purchases fared less well. Investment fell to 2.12% – the lowest in two years – and government spending also contracted.
Among the sectors on the upside, agriculture stood out, growing by as much as 10.5%, mainly due to better rice and maize harvests. The mining sector, on the other hand, declined by around 1%, due to lower coal prices.
Despite the pessimistic start to the year, economists expect an improvement in the second half of 2025 – mainly due to a potential easing of trade tensions and acceleration of government spending. As highlighted by Economy Minister Airlangga Hartarto, Indonesia’s growth rate continues to outpace many other G20 countries.
