MACROECONOMIC ANALYSIS SERIES: Indonesia Economic Outlook Q2-2025 - Entering the Sub-Five Territory

Jahen F. Rezki (), Teuku Riefky (), Faradina Alifia Maizar (), Difa Fitriani (), Mervin Goklas Hamonangan (), Hardi Salim () and Alif Ihsan A Fahta ()
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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)

No 202502, LPEM FEBUI Quarterly Economic Outlook from LPEM, Faculty of Economics and Business, University of Indonesia

Abstract: Indonesia’s economy still managed to grow beyond 5% in 2024, with the growth rate of 5.03% (y.o.y) and decreased from 5.05% (y.o.y) in 2023. The latest growth figure prolonged a worrying signal that Indonesia’s economy is having difficulty to keep its 5% pace of growth. In the past few years, Indonesia has been struggling with its structural growth engine, illustrated by declining purchasing power, shrinking middle class, and persistent decrease in sectoral productivity. Previously, Indonesia’s economy could always relied on seasonal factors, such as Ramadan and Eid Al-Fitr period and end-of-year holiday period to bolster its economic performance. However, while still managed to record a 5% growth in the last quarter of 2024, the effect of seasonal factors seem to be dwindling. In the last end-of-year holiday period, individuals opted to travel shorter distances for vacation and leisure activities, suggesting signs of weakening purchasing power as consumers spend less for tertiary goods. If left unmitigated, Indonesia’s economic growth might dive into a downward trajectory as its currently losing its seasonal growth engine while has not been able to revitalize its structural growth engine.

Keywords: gdp; —; economic; quarterly; —; economic; outlook; —; inflation; —; macroeconomics (search for similar items in EconPapers)
Date: 2025-02, Revised 2025-02
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