JAKARTA – Permata Bank’s Chief Economist, Julius Pardede, has revised Indonesia’s economic growth forecast for 2025 to below 5%.

According to Julius, the Permata Institute for Economic Research (PIER) projects that economic growth throughout 2025 will decelerate, falling short of its earlier target.

“Therefore, we hope the government will respond with more expansionary fiscal policies and targeted stimulus to revive domestic consumption and investment,” said Julius at the Economic Review event on Wednesday (14/5), which discussed recent developments in Indonesia’s economy, particularly first-quarter 2025 gross domestic product (GDP).

Julius added that rising uncertainty from trade wars has led many companies to postpone investments and expansion plans.

PIER now forecasts GDP growth to slow from 5.03% in 2024 to between 4.5% and 5.0% in 2025, down from an initial target of 5.11%.

Indonesia’s GDP growth in the first quarter of 2025 stood at 4.87% year-on-year (yoy), a decline from 5.02% previously.

Household consumption, a key pillar of Indonesia’s economy, also slowed to 4.89%.

From a sectoral perspective, agriculture recorded the highest growth at 10.52%, driven by a surge in staple crop production such as rice and maize.

Meanwhile, the manufacturing sector expanded by 4.55%, supported by strong export demand in the basic metals industry.

Retail trade posted 5.03% growth, bolstered by the momentum of Ramadan.

One of the main causes of Indonesia’s GDP slowdown in 2025 is global uncertainty stemming from ongoing trade wars, which are expected to weigh on both investment and domestic consumption.

Julius added that trade conflicts would impact sectoral growth unevenly.

“Export-oriented sectors heavily reliant on the US market – such as textiles and garments, leather and footwear, electronics, furniture, and rubber products – may experience slower growth in 2025,” he said. (DK/ZH)