By: Farhan Farisan )*
The government has shown a quick and strategic response in dealing with the impact of the import tariff policy imposed by the President of the United States (US) Donald Trump. The policy, which raises tariffs on various products from trading partner countries including Indonesia, poses a challenge to the national economy which depends on the export sector and global trade relations.
The government’s anticipatory steps can be seen from the strengthening of bilateral and multilateral cooperation which is being carried out intensively, especially with strategic partner countries such as Japan. In a situation full of pressure due to the global trade war, Indonesia has been able to maintain economic stability through export market diversification and strengthening the domestic sector.
Bank Indonesia (BI) predicts that Indonesia’s economic growth this year will remain positive despite being affected by the US tariff policy. The direct and indirect impacts of the policy are responded to through strengthening the fundamentals of the national economy and controlling inflation.
The Executive Director of the BI Communication Department, Ramdan Denny Prakoso, said that Indonesia’s economic growth in 2025 is predicted to be in the middle of the range of 4.7-5.5 percent annually (year on year/yoy). This reflects optimism about Indonesia’s ability to maintain stability amid external dynamics.
In the first quarter of 2025, the Indonesian economy recorded growth of 4.87 percent (yoy), slightly slower than the previous quarter which reached 5.02 percent (yoy). This slowdown was partly influenced by global uncertainty due to increasing protectionist policies in various countries.
Indonesia’s economic performance continues to be supported by household consumption which grew by 4.89 percent (yoy). This increase in consumption was driven by community activities during the New Year holiday and the National Religious Holiday (HBKN) Idul Fitri, which increased money circulation in various trade and service sectors.
Investment also recorded growth of 2.12 percent (yoy), supported by an investment climate that remains conducive thanks to regulatory certainty and fiscal policy support that encourages the realization of national strategic projects.
Although government consumption contracted by 1.38 percent (yoy) due to the normalization of spending after the 2024 Election, spending by non-profit institutions serving households (LNPRT) grew positively by 3.07 percent (yoy), reflecting the contribution of the social sector to strengthening the economy.
From the external side, Indonesia’s exports grew by 6.78 percent (yoy), supported by demand from major trading partners and growth in service exports, especially tourism. This sector is one of the mainstays in strengthening foreign exchange reserves and creating jobs.
From the business sector side, growth in the first quarter of 2025 was driven by the manufacturing, trade, and transportation and warehousing sectors. The Ramadan and Eid al-Fitr moments drove a surge in domestic demand that strengthened production and distribution activities.
The agricultural sector also made a positive contribution with a bumper harvest of rice and corn that strengthened national food security. Meanwhile, the service sector remained stable along with increasing economic activity in the community.
Spatially, the Sulawesi, Maluku, and Papua (Sulampua) regions recorded the highest economic growth, demonstrating the equitable development that the government continues to strive for outside Java. Java and Sumatra remain the main contributors to national GDP.
In addition, the Coordinating Minister for the Economy, Airlangga Hartarto, said that Indonesia’s trade cooperation with Japan continues even though the global situation is facing tension due to the trade war. The government remains focused on maintaining mutually beneficial trade relations with partner countries such as Japan.
Recently, the Special Envoy of the Japanese Prime Minister, Fumio Kishida, met with President Prabowo Subianto in Bogor to discuss the continuation of cooperation within the framework of the Asia Zero Emission Community (AZEC). The meeting was real evidence of Indonesia’s proactive and measured economic diplomacy.
In the meeting, Japan conveyed their commitment through concrete projects, including the 80 MW geothermal project in Muara Laboh, West Sumatra, worth around 500 million dollars. This project signifies foreign investors’ confidence in Indonesia’s economic stability and potential.
Airlangga said that Indonesia has more than 170 memorandums of understanding (MoU) with Japan, reflecting the close economic relations between the two countries. This cooperation provides space for diversifying sources of economic growth amid tariff pressures from the US.
The government is also strengthening inter-agency coordination to adjust fiscal and monetary policies in response to the impact of Trump’s tariff policies. Steps such as tax incentives and real sector stimulus continue to be optimized to maintain growth momentum.
Quick responseThe government’s response to these global challenges demonstrates Indonesia’s readiness to manage external risks through inclusive and targeted policies. The strategic approach taken by the government deserves to be appreciated as a form of strong economic leadership.
These steps not only maintain short-term economic stability, but also strengthen the long-term foundation for Indonesia to become an independent and adaptive regional economic power.
Therefore, the government is encouraging the acceleration of digital transformation and increasing the competitiveness of domestic industries as a long-term effort to reduce dependence on external markets that are vulnerable to fluctuations in global policies, including tariff policies from major trading partner countries such as the United States.
)* The author is a Bandung student living in Jakarta
