During his campaign, Trump laid out an economic agenda that economists and pundits have called extreme and dangerous. They warned that if fully implemented, it would have disastrous consequences, with its impact reverberating to other countries including emerging markets.

Indonesia cannot escape this impact.

Indonesia’s economic growth has been weakening since 2022, declining from 5.3 percent to 5.05 percent in 2023 and to 4.95 percent in the third quarter (Q3) this year. Consumption growth remained steady following strong recovery in 2022, registering growth at 4.9 percent throughout 2024. There has been concern over weakening buying power, as indicated by the yoy drop in headline inflation to 1.7 percent in October from previous months.

But core inflation (excluding volatile food and energy prices) has been increasing throughout the year, reaching the highest level of 2.2 percent last month. This indicates that the buying power of some consumer groups has not been affected by the slowing economy.

Government consumption and gross capital formation showed strong growth, but these were offset by higher negative net exports.

On the supply side, manufacturing growth weakened from 4.9 percent in 2022 to 4.5 percent in 2023, and then to 4.3 percent in Q3 2024. As the manufacturing purchasing managers’ index (PMI) has been declining for the last two months, growth in this sector is expected to continue weakening until the end of the year.