Indonesia's Q1 GDP Growth Slows to 4.87%, Lowest in Over Three Years

Indonesia’s economy expanded by 4.87% year-on-year in Q1 2025, marking its slowest pace since Q3 2021 and falling short of the 4.91% growth forecast by analysts in a Reuters poll. The figure also dipped from 5.02% in the previous quarter, signaling a cooling economy amid global and domestic headwinds.

On a quarter-on-quarter basis, gross domestic product (GDP) shrank by 0.98%, based on data from Statistics Indonesia. The resource-rich nation has consistently posted around 5% growth post-pandemic but now faces increasing challenges.

President Prabowo Subianto, who assumed office last year, aims to boost GDP growth to 8% during his five-year term. However, this goal is being tested by slowing global trade, rising tariffs—particularly on U.S.-bound exports—and weakening domestic demand. Discussions between Jakarta and Washington are ongoing amid rising protectionism.

Household consumption, which contributes over half of Indonesia’s GDP, grew 4.89% annually—its slowest in five quarters—despite Ramadan and Eid celebrations in March. Investment growth slid to 2.12%, the lowest in two years, while government spending declined, adding pressure to overall growth.

Mining sector output fell roughly 1% year-on-year, hurt by declining coal prices, reduced global demand, and maintenance activity at the Grasberg copper and gold mine operated by Freeport McMoRan. On the positive side, net exports contributed more to GDP as imports dropped, and the agriculture sector surged 10.5%, thanks to strong rice and corn harvests.

Indonesia, Southeast Asia’s largest economy, now finds itself at a crossroads. As it grapples with trade uncertainty and fiscal tightening, policymakers face mounting pressure to revive momentum and meet ambitious growth targets.