Indonesia’s Economy Grows by 5.03% in 2024, Matching Previous Year’s Rate
Indonesia: Indonesia's economy expanded by 5.03% in 2024, maintaining a similar pace to the previous year's 5.05%, according to official data. This growth rate, the slowest in three years, was influenced by political campaign spending, rising investment, and government incentives, including property tax cuts and a higher minimum wage. Investment growth reached 4.61% year-on-year, marking its highest level in six years, while household consumption, which accounts for more than half of GDP, grew by 4.98%. However, net exports declined, and global trade uncertainties continued to pose risks. In the fourth quarter, GDP increased by 5.02% annually and 0.53% quarter-on-quarter on a non-seasonally adjusted basis. Bank Indonesia has adjusted its 2025 growth forecast to a range of 4.7%-5.5%, citing concerns over potential trade disruptions from U.S. tariffs and weakening global demand.
Looking ahead, the government has introduced policies aimed at boosting economic activity, including a free meals programme for children and pregnant women, electricity tariff discounts, and affordable housing initiatives. While these measures are expected to support growth, infrastructure spending has been reduced for 2025 following increased investment in toll roads and dams under the previous administration. Analysts anticipate further rate cuts by Bank Indonesia to stimulate the economy, with GDP growth projections for 2025 ranging from 5.1% to 5.15%. Weak car sales have indicated subdued demand for durable goods, which could influence future monetary policy decisions.
Source: Reuters