Jakarta, The government continues to strengthen concrete steps to maintain national economic growth amid global pressures and domestic slowdown signals. Although the Organization for Economic Co-operation and Development (OECD) has cut Indonesia’s growth projection for 2025 from 4.9% to 4.7%, the government is optimistic that it can maintain economic growth in the range of 5% through a series of targeted stimulus programs.
Apindo Economic Policy Analyst, Ajib Hamdani, revealed that the economic slowdown has started to be felt since the beginning of 2025. The first quarter is usually influenced by increased consumption due to the momentum of Eid.
“Economic growth in the first quarter of 2025 is indeed quite worrying, which is only around 4.87%. If we compare it with the first quarter of 2024 of 5.11%, there is clearly a decline,” he said.
Ajib also highlighted another indicator that showed weakness, namely the Manufacturing PMI. In April and May, the PMI was recorded at 46.7 and 47.4 respectively, indicating a contraction in the industry.
“The contraction in the Manufacturing PMI generally provides a picture and is an indicator of the decline in people’s purchasing power,” he said.
According to him, there are four main factors causing the economic downturn. First, the decline in people’s consumption capacity due to the wave of layoffs and the increasing poverty rate.
“Layoffs since the beginning of the year have reached more than 70,000 in the first quarter, and by World Bank standards, poverty will reach 60.3% in 2024,” he explained.
The second factor is low tax revenue and government spending efficiency programs. Saving state spending has a negative impact on the economy.
“First quarter tax revenue was only 14.7% of the target, whereas the ideal is 20%,” continued Ajib.
While the third factor is from abroad. An example is the tariff policy implemented by US President Donald Trump.
“The tariff policy implemented by the United States under President Trump has caused demand for goods, especially from America, to decline since April,” he explained.
Meanwhile, the fourth factor, according to Ajib, is the investment structure which is too concentrated in capital-intensive sectors.
“Compared to 2014, where every Rp 1 trillion investment could absorb 4,000 workers, in 2024 it will only be around 1,000 workers. This means that the multiplier effect on employment is less than optimal,” he said.
For this reason, he encouraged the government to immediately take concrete steps in the second semester of 2025. The economic stimulus program that focuses on the Direct Cash Assistance (BLT) pattern will be effective in increasing public consumption and boosting purchasing power.
“The government must encourage direct cash assistance and increase more targeted state spending,” Ajib stressed.
He also emphasized the importance of the principle of spending better in managing state spending.
“The government must focus on pro job creation, food security, and energy. This is in line with President Prabowo Subianto’s Asta Cita program, which is to increase quality employment,” he said.
Although challenges still exist, Ajib remains optimistic and confident that the government can maintain economic growth in 2025 at a minimum of 5%.
“This will be a positive foundation ahead of entering 2026, where the government already has a more escalative economic growth projection in the range of 5.2%–5.8%,” he said.
Meanwhile, Secretary of the Coordinating Ministry for Economic Affairs, Susiwijono Moegiarso, stated that the government is targeting economic growth in the second quarter of 2025 to remain in the range of 5%.
“The Q2-2025 Economic Stimulus has been discussed in depth at the Limited Coordination Meeting (Rakortas) at the Ministerial level led by the Coordinating Minister for the Economy and attended by Ministers, Deputy Ministers and Heads/Representatives of related Ministries/Institutions. The Rakortas has agreed that all economic stimulus programs will be implemented immediately starting June 5, 2025,” said Susiwijono.
