Indonesia’s GDP Outlook for 2025: Growth, Challenges, and Policy Responses

As of October 2025, Indonesia’s economic performance has shown resilience amid global uncertainties and domestic challenges. The nation’s Gross Domestic Product (GDP) is projected to grow at approximately 4.9% in 2025, according to the International Monetary Fund (IMF) IMF.

Economic Growth Trends

In the first quarter of 2025, Indonesia’s GDP expanded by 4.87% year-on-year, with a slight quarter-on-quarter contraction of 0.98% Badan Pusat Statistik Indonesia. The economy rebounded in the second quarter, achieving a 5.12% year-on-year growth, driven by robust domestic consumption and a surge in exports Badan Pusat Statistik Indonesia.

Sectoral Contributions

Key sectors contributing to economic growth include:

• Agriculture, Forestry, and Fishing: Experiencing significant growth, these sectors have been pivotal in supporting rural employment and food security.
• Manufacturing and Services: These sectors have shown steady performance, bolstered by both domestic demand and export activities.
• Trade and Exports: Exports have been a critical driver, benefiting from global trade dynamics and regional demand.

Inflation and Monetary Policy

Inflation remains within manageable levels, with the central bank targeting a rate of 2.3% for 2025 OECD. In response to economic conditions, Bank Indonesia has implemented a series of interest rate cuts, aiming to stimulate investment and consumption while maintaining financial stability Reuters.

Government Stimulus Measures

To bolster economic activity, the Indonesian government has introduced stimulus packages totaling approximately IDR 30 trillion (USD 1.81 billion). These measures include direct cash handouts to households and an expansion of paid internship programs for university graduates, aimed at addressing youth unemployment and enhancing workforce skills Reuters.

Outlook and Challenges

Looking ahead, the IMF projects Indonesia’s GDP growth to stabilize at 4.9% in 2025 IMF. However, challenges such as global trade tensions, fluctuating commodity prices, and domestic structural issues may impact this trajectory. The government’s focus on infrastructure development, investment in human capital, and economic diversification will be crucial in sustaining growth momentum.