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MACROECONOMIC ANALYSIS SERIES: Indonesia Economic Outlook Q1-2025 - Aiming for 8, Struggling at 5

Author

Listed:
  • Jahen F. Rezki

    (Institute for Economic and Social Research, Faculty of Economics and Business, Universitas Indonesia (LPEM FEB UI))

  • Teuku Riefky

    (Institute for Economic and Social Research, Faculty of Economics and Business, Universitas Indonesia (LPEM FEB UI))

  • Faradina Alifia Maizar

    (Institute for Economic and Social Research, Faculty of Economics and Business, Universitas Indonesia (LPEM FEB UI))

  • Difa Fitriani

    (Institute for Economic and Social Research, Faculty of Economics and Business, Universitas Indonesia (LPEM FEB UI))

  • Mervin Goklas Hamonangan

    (Institute for Economic and Social Research, Faculty of Economics and Business, Universitas Indonesia (LPEM FEB UI))

  • Hardi Salim

    (Institute for Economic and Social Research, Faculty of Economics and Business, Universitas Indonesia (LPEM FEB UI))

  • Alif Ihsan A Fahta

    (Institute for Economic and Social Research, Faculty of Economics and Business, Universitas Indonesia (LPEM FEB UI))

Abstract

Indonesia enters 2025 with a substantially weakening economic performance. Declining purchasing power, shrinking middle class, and prolonged deterioration in sectoral productivity send a clear signal of significant structural issues, as reflected in the growth figure throughout 2024. The third quarter of 2024 stood out as the only quarter in 2024 without a significant seasonal factor that drove economic activity. Only grew by 4.95% (y.o.y) in Q3-2024, Indonesia’s economic growth dipped below 5%, lower than 5.11% (y.o.y) in Q1-2024 and 5.05% (y.o.y) in Q2-2024. The latest GDP growth figure painted a bleak picture and further suggests a worrying structural problem that the Indonesian economy is currently incapable of reaching a 5% growth level without any seasonal driver. This is not a new phenomenon, as a similar occurrence also happened in 2023, in which Indonesia's economic growth only reached 4.94% (y.o.y) in the third quarter. After the passing of the homecoming period during Eid Al-Fitr and the school holiday season in the second quarter of 2024, various related economic sectors experienced a growth decline, such as the transportation and storage sector, business services sector, and accommodation and food and beverages activity.

Suggested Citation

  • Jahen F. Rezki & Teuku Riefky & Faradina Alifia Maizar & Difa Fitriani & Mervin Goklas Hamonangan & Hardi Salim & Alif Ihsan A Fahta, 2025. "MACROECONOMIC ANALYSIS SERIES: Indonesia Economic Outlook Q1-2025 - Aiming for 8, Struggling at 5," LPEM FEBUI Quarterly Economic Outlook 202501, LPEM, Faculty of Economics and Business, University of Indonesia, revised Jan 2025.
    • Handle: RePEc:lpe:queout:202501
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    File URL: https://lpem.org/repec/lpe/queouts/IEO202501.pdf
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