Indonesia‘s Economy Expands by 4.87% in First Quarter of 2025

Jakarta, Indonesia – The Indonesian economy demonstrated continued growth in the first quarter of 2025, expanding by 4.87% year-on-year, according to official data released on May 5, 2025. This figure indicates a sustained, albeit moderate, recovery following global economic headwinds.

The growth was primarily driven by robust domestic consumption, particularly in the household sector, and a notable increase in investment. Government spending also contributed positively to the overall economic performance. Key sectors showing critically important expansion included manufacturing, transportation, and interaction.

Bank Indonesia (BI), the central bank, has maintained a relatively stable monetary policy throughout the quarter, wiht the benchmark 7-Day Reverse Repo Rate remaining at 6.00%. This policy aimed to balance supporting economic growth with controlling inflation, which stood at 2.8% in April 2025, remaining within BI’s target range of 2.5% – 4.5%.

exports experienced a slight contraction due to weaker global demand, particularly from China and the United States. However, the Indonesian government is actively pursuing diversification of export markets, focusing on strengthening trade ties with countries in Southeast Asia, the Middle East, and Africa.

The Coordinating Minister for Economic Affairs, Airlangga Hartarto, stated that the government remains optimistic about achieving its full-year economic growth target of 5.0% – 5.4% for 2025. He emphasized the importance of continued structural reforms, including improvements in infrastructure, human capital development, and the business climate.

Analysts at Mandiri Sekuritas predict that the growth momentum will continue in the coming quarters, supported by increased infrastructure spending under the National Strategic Projects (PSN) initiative and a projected recovery in global commodity prices. The PSN includes projects such as the construction of the nusantara Capital City in East Kalimantan and the expansion of toll road networks across Java and Sumatra.

The Indonesian Rupiah (IDR) has shown relative stability against the US Dollar, trading at around 16,000 IDR per USD as of May 5, 2025. This stability is attributed to BI’s intervention in the foreign exchange market and the country’s healthy foreign exchange reserves, which currently stand at approximately $140 billion.

Looking ahead, potential risks to Indonesia’s economic growth include geopolitical uncertainties, fluctuations in global commodity prices, and the potential for further disruptions to global supply chains. the government is closely monitoring these risks and implementing measures to mitigate their impact.