RI Economic Growth Projection Cut To 4.6-5.4%

RI Economic Growth Projection Cut To 4.6-5.4%

Monday, 26 May 2025

Bank Indonesia (BI) has decided to cut its projection for Indonesia's economic growth in 2025 to a range of 4.6-5.4%. This estimate is slightly lower than the previous estimate of 4.7-5.5%.

BI Governor Perry Warjiyo said the lower projection was based on the slowing realization of economic growth in the first quarter of 2025 and the impact of global economic dynamics.

"With the realization of GDP in the first quarter of 2025 and observing the dynamics of the global economy, BI estimates that Indonesia's economic growth in 2025 will be in the range of 4.6-5.4%, slightly lower than the previous estimate of 4.7-5.5%," Perry said in a virtual press conference on Wednesday (21/5/2025) yesterday.

Previously, Indonesia's economy in the first quarter of 2025 grew by 4.87%, lower than the fourth quarter of 2024 which was 5.02%. This growth is considered necessary to be encouraged to mitigate the impact of global uncertainty due to the reciprocal tariff policy implemented by United States (US) President Donald Trump.

"Indonesia's economic growth needs to continue to be strengthened so that it can mitigate the impact of global uncertainty due to reciprocal tariff policies," Perry said.

According to Perry, in the second quarter of 2025, several economic indicators will begin to show signs of improvement. This is driven by increased domestic demand and increased government spending.

"Various policy responses need to be further strengthened to encourage economic growth, including through strengthening domestic demand and optimizing opportunities for increasing exports," Perry explained.

Brighter Global Economic Prospects, but Need to Be Alert

Perry stated that global economic uncertainty has actually eased slightly. This improvement is supported by a temporary agreement between the US and China that lowers import tariffs for 90 days. Perry said the easing tariff war conditions will make the prospects for global economic growth in 2025 brighter with growth at 3%, from the previous estimate of 2.9%

"Global economic uncertainty has eased slightly with the temporary agreement between the US and China to lower import tariffs for 90 days. This development has resulted in a better outlook for the world economy compared to the April 2025 projection, which was from 2.9% to 3%," Perry said. As is known, the US and China have agreed to make peace by temporarily cutting import tariffs for 90 days. US products entering China are subject to a 10% tariff from the previous 125%, while goods from China to the US are subject to a 30% tariff from the previous 145%.

Even so, Perry assessed that the development of import tariff negotiations between the US and China and other countries is still dynamic. This condition requires vigilance and strengthening of responses to maintain external resilience, control stability and encourage domestic economic growth. "In the future, the development of import tariff negotiations between the US and China and other countries will still be dynamic so that global economic uncertainty remains high. This condition requires vigilance and strengthening of policy responses and coordination," Perry explained.

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