Indonesia’s economy grew by 4.87% year-on-year (YoY) in the first quarter of 2025, showing a slight slowdown from the 5.02% YoY growth seen in the previous quarter.

This development was influenced by both domestic economic activities and the country’s export performance.

For the remainder of 2025, economic growth is expected to be slightly below the midpoint of the 4.7% to 5.5% YoY range, due to the direct and indirect effects of U.S. tariff policies.

Household Consumption and Exports Support GDP Growth

Household consumption contributed significantly to the GDP growth in Q1 2025, increasing by 4.89% YoY. This was attributed to rising economic activity and mobility, especially during the New Year and Idulfitri holidays.

Exports also grew by 6.78% YoY, driven by strong demand from key trading partners and a rise in international tourism services.

Investment growth stood at 2.12% YoY, supported by positive capital formation, while government consumption contracted by 1.38% YoY due to a reduction in spending after the peak election-related expenditures in 2024.

Key Sectors Driving Growth: Manufacturing, Trade, and Transportation

The industrial and trade sectors significantly contributed to the GDP growth, with the manufacturing and transportation sectors benefiting from domestic demand during Ramadan and Idulfitri, along with rising external demand.

Agriculture also posted growth, supported by the harvest of rice and corn.

Regional Economic Growth Varies Across Indonesia

Regionally, the highest economic growth in Q1 2025 was observed in the Sulampua region, followed by Java, Sumatra, Kalimantan, and Bali-Nusa Tenggara (Balinusra).

This reflects a variation in economic performance across different regions, influenced by local economic activities and national trends.

PHOTO: UNSPLASH

This article was created with AI assistance.