Indonesia’s Economic Growth Slows to Near Four-Year Low in Q2 2025

Q2 2025 GDP Growth Slows

Indonesia: Indonesian economy is expected to have grown at its slowest pace in nearly four years in Q2 2025, with GDP estimated at 4.80% year-on-year for April–June, down from 4.87% in Q1, according to a Reuters poll of 26 economists. While quarterly GDP likely rebounded 3.70% after a 0.98% contraction in January–March, weak household spending, stagnant real wages, declining retail sales, and high youth unemployment weighed heavily on domestic demand. Retail sales fell 0.3% in April and grew just 1.9% in May, reflecting muted consumption despite stronger exports.

To support growth, the government introduced a 24 trillion-Rupiah (USD 1.5 billion) stimulus package in June, including cash handouts and transport subsidies. Exports surged 11.29% in June, partly driven by accelerated shipments ahead of a proposed U.S. tariff hike, which was later revised from 32% to 19%. Although only 10% of Indonesia’s exports are U.S.-bound, global trade tensions pose indirect risks to growth. In response to subdued domestic demand and soft global conditions, Bank Indonesia cut interest rates last month and signaled potential further easing. A separate Reuters poll projects full-year 2025 growth at 4.8%, near the lower end of the central bank’s 4.6%–5.4% forecast range, and significantly below the government’s 8% annual growth target.

Source: EconoTimes