By: Alfin Prasetya*
Amid the uncertain dynamics of the global economy, Indonesia has once again demonstrated its resilience. National economic growth reaching 4.87% year-on-year in the first quarter of 2025 is clear evidence that the Indonesian economy is not weakening, but continues to grow with increasingly strong foundations. Even more encouraging, this achievement places Indonesia in the second highest ranking in the G20 group of countries, only below China which recorded growth of 5.4%. This momentum reflects the hard work and accuracy of government policy direction as well as the resilience of the national real sector.
The main driver of economic growth in this period was the manufacturing industry sector which grew 4.55% and contributed 19.25% to the total Gross Domestic Product (GDP). This strengthens the position of the manufacturing industry as the backbone of the national economy. This growth was driven by a combination of domestic demand and exports, especially in the food and beverage, base metals, and leather and footwear subsectors. Head of the Central Statistics Agency (BPS), Amalia Adininggar Widyasanti, explained that the growth of the manufacturing industry reflects a positive response to the dynamics of seasonal and global demand. The manufacturing industry grew 4.55% driven by domestic and foreign demand. This confirms that the Indonesian manufacturing industry not only serves the domestic market, but is also able to compete in the global market.
Amalia also detailed that the food and beverage sub-sector grew 6.04% thanks to increased consumption during Ramadan and Eid al-Fitr, while the basic metal industry grew rapidly by 14.47% due to high export demand, especially for iron and steel products. No less significant, the leather and footwear industry grew 6.95% due to a surge in domestic demand and increased exports. This achievement shows that the Indonesian manufacturing sector has not only survived, but also developed in various production lines and market segments.
National economic growth is also supported by other sectors such as trade which grew 5.03%, agriculture 10.52%, and transportation and warehousing by 9.01%. High growth in the agricultural sector, especially food crops which jumped to 42.26%, indicates the success of the main harvest and increasing domestic demand for basic commodities. Meanwhile, the transportation sector received a boost from increased community mobility during religious holidays. All of this reflects that the Indonesian economy is moving inclusively and evenly across all levels.
Coordinating Minister for Economic Affairs Airlangga Hartarto emphasized that Indonesia’s position as the country with the second highest economic growth in the G20 is an achievement that cannot be underestimated. In fact, Indonesia surpassed neighboring countries such as Malaysia and Singapore, and was much better than Germany and South Korea which recorded contractions. Airlangga is optimistic that in the following quarters, growth will continue to be maintained, especially with the start of the government spending budget which will add stimulus to the national economy.
Meanwhile, Minister of State Secretary Prasetyo Hadi invited all parties to remain optimistic amidst projections from the International Monetary Fund (IMF) which estimates that Indonesia’s economic growth in 2025 will reach 4.7%. According to him, projections from international institutions such as the IMF are reasonable, but should not be a reason to weaken the national spirit. He emphasized that Indonesia’s current economic foundation is quite strong, with controlled inflation, stable household consumption, and a continuously maintained investment climate. Prasetyo also highlighted the importance of synergy between the government, business world, workers, and the wider community in maintaining sustainable economic growth.
The government itself continues to show its seriousness in creating a better investment climate by reviewing regulations that have so far hampered the entry of capital. This strategic step is one of the important foundations in maintaining the sustainability of the growth of the processing sector and industry in general. Not only does it open up space for business expansion, but it also strengthens national competitiveness amidst increasingly tight global competition.
In the long-term context, the processing sector is an important pillar of Indonesia’s economic transformation from a raw commodity-based economy to a high-value-added economy. Downstream strategies, strengthening domestic supply chains, and improving the quality of human resources are elements that cannot be left out. Moreover, with the increasingly open global market, the industry’s ability to process raw materials into final products will determine Indonesia’s position in the world value chain.
However, challenges remain ahead. Global price fluctuations, the impact of policiesprotectionism of other countries, as well as geopolitical uncertainty can still affect the dynamics of the Indonesian economy. Therefore, the government together with all economic actors need to continue to maintain macro stability, accelerate structural reforms, and strengthen cross-sector collaboration.
Finally, the strong economic growth in the first quarter of 2025 and the significant contribution of the processing sector are proof that the Indonesian economy is not only surviving, but also developing on a solid footing. This momentum must be maintained with rational optimism, solid cooperation, and adaptive and inclusive policies. Thus, Indonesia will not only be an important player at the regional level, but will also be able to compete on the global economic stage.
*The author is an economic observer
