Economist: Economic Growth In The First Quarter Of 2025 Can Achieve 5.1 Percent

JAKARTA - Head of Macroeconomic and Financial Market Research PermataBank Faisal Rachman projects Indonesia's economic growth in the first quarter of 2025 to be in the range of 5.1 percent, supported by the loss of El Nino's impact and the shift in the fall of Ramadan.

"For the full year of 2025, we see Indonesia's economic growth to be in the range of 5.1 percent, in line with the continued economic recovery but limited by the risk of trade war and continuing with the relatively high interest rate," said Faisal, quoted by Antara, Wednesday, January 8.

He said the main engine driving Indonesia's economic growth was domestic demand, such as household consumption.

Regarding the cancellation of the VAT increase to 12 percent for most goods and services, Faisal also saw potential for domestic demand.

In addition, Faisal noted, the main engine driving economic growth also comes from investment. This was also supported by the end of the political year and the pro-growth agenda (pro-growth) of President Prabowo Subianto's administration.

Flashback last year, Indonesia's economy in the first quarter of 2024 grew 5.11 percent year on year (yoy). Furthermore, economic growth reached 5.05 percent in the second quarter of 2024 and 4.95 percent in the third quarter of 2024.

In a press conference on the KiTa State Budget in Jakarta, Monday (6/1), Finance Minister Sri Mulyani Indrawati projected that Indonesia's economic growth would only reach 5 percent by 2024.

In line with this projection, Faisal estimates that economic growth in the fourth quarter of 2024 will be in the range of 5 percent.

This is supported by the strengthening of domestic demand in line with the Christmas and New Year's seasonal patterns, the implementation of regional elections, and the seasonal pattern of increasing state spending towards the end of the year.

"In full year 2024 there will be in the range of 5.02 percent," he said.

By considering the current fundamentals of the economy, Faisal said that the possibility of a recession for Indonesia is quite small.

However, he warned that global uncertainty will continue to increase which will have an impact on the external sector of Indonesia such as export-imports, as well as financial markets, especially interest rates, rupiah exchange rates, and bond yields so that there is stability pressure.

"Balancing between maintenance stability and supporting growth (balance between maintaining stability and supporting growth) is crucial to keep economic growth in the range of 5 percent or more," said Faisal.