Indonesia's growth is at lowest since 2021

Data is bad news for region's top economy

- GRACE SIHOMBING

Indonesia's economy grew at the slowest pace in over three years amid tepid household consumption and a sharp drop in state spending and investment, putting President Prabowo Subianto’s 8% goal even further out of reach.

Gross domestic product in the three months through March expanded 4.87% from a year earlier, the statistics office said yesterday. That's below the 4.92% median estimate in a Bloomberg survey and is the lowest print since the third quarter of 2021. On a quarterly basis, the GDP fell 0.98%, more than the estimated contraction of 0.90%.

The data is bad news for Southeast Asia's largest economy, which needs domestic demand to help insulate it from the escalating global trade war. US President Donald Trump has threatened Indonesia with a 32% so-called reciprocal tariff, among the highest in the region, though the levy has been pared back to 10% for now to allow time for trade negotiations.

"The slump in investment has domestic as well as external drivers. What's more, the worst has yet to come,” economist Tamara Henderson of Bloomberg Economics wrote in a report. “The much softer growth outlook, together with already-benign inflation, is likely to prompt Bank Indonesia to cut its policy rate by another 25 basis points later this month — especially if the rupiah can hold on to recent gains.”