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Countercyclical policies to support economic growth
The anticipated monetary easing in 2025 presents a strategic opportunity that the banking sector should fully capitalize on.
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A man uses his phone while waiting for customers on March 6, 2025, at a clothing shop in Tanah Abang Market in Jakarta. Buying new clothes is a common tradition among Muslims to celebrate Idul Fitri, which marks the end of the holy month of Ramadan. (AFP/Bay Ismoyo)
Indonesia's economic conditions in the beginning of 2025 indicate a slowdown that must be addressed carefully.
Global challenges are rising with the tariff war between the United States and most of its trading partners, which has led to expectations of a global economic slowdown.
The International Monetary Fund in its latest projections revised Indonesia's economic growth forecast downward from 5.1 percent in January 2025 to 4.7 percent in April.
This adjustment reflects a broader global trend, as many other countries have also experienced downward revisions to their growth outlook.
Meanwhile, Indonesia’s gross domestic product in the first quarter grew by 4.87 percent year-on-year (yoy), slowing from previous quarters that were consistently above 5 percent.
This deceleration is primarily caused by moderating fixed investment and government spending. Fixed investment grew by only 2.12 percent, while government expenditure contracted by 1.38 percent.
Household consumption remains the main driver, yet its momentum is not strong enough to offset the drag from fiscal and investment sides, which highlights the urgency for more pro-growth policies to maintain the growth momentum.
