Indonesia's first quarter GDP growth slowest in over 3 years

Indonesia's economy grew at its weakest pace in more than three years in the first quarter, with headwinds expected in the rest of the year stemming from global trade turmoil and declining household spending.

- 

Southeast Asia’s largest economy grew 4.87% in the first quarter from a year earlier, its slowest rate since the third quarter of 2021 and down from 5.02% in the previous quarter. Growth was roughly in line with analysts’ forecasts in a Reuters poll at 4.91%.

President Prabowo Subianto, who took office last year, has pledged to lift GDP growth to 8% during his five-year term, but is facing challenges from slowing global growth amid a trade war, as well as weakening domestic demand and a tighter budget position.

U.S.-bound exports could also be hit by hefty tariffs in coming months, which Jakarta is looking to avert in talks with Washington.

“Various challenges are already in sight, such as the negative impact of trade war tensions between the US and its trading partner countries, including Indonesia,” said Myrdal Gunarto, Maybank Indonesia economist.

Global market uncertainties may also limit the central bank's room to ease monetary policy, he said.

Bank Indonesia has cut interest rates twice since September and has said it has room to cut further, though its priority was maintaining market stability.