Arnoldus Kristianus, Jakarta – Bank Indonesia has revised down its economic growth projection for 2025 to a range of 4.6 to 5.4 percent, citing weaker global growth and slower-than-expected performance in the first quarter of the year. The central bank had previously forecast growth between 4.7 and 5.5 percent.

Governor Perry Warjiyo announced the revised outlook during a virtual press conference following the May 2025 Board of Governors Meeting held on May 20-21.

"The downward revision reflects the slowdown in global economic activity and the fact that Q1-2025 GDP growth came in lower than the 5.02 percent recorded in Q4-2024," BI Governor Perry Warjiyo announced on Wednesday.

Indonesia's GDP grew by 4.87 percent in the first quarter, supported primarily by increased household consumption during the New Year and Eid holidays. Investment also rose in line with realized capital inflows, while exports benefited from sustained demand from major trading partners and strong service exports.

Perry expressed optimism that growth would accelerate in the second half of 2025, driven by rising domestic demand, including an uptick in government spending. He stressed the need for coordinated policy efforts to stimulate economic activity in the coming quarters.

"To support growth, we need to strengthen domestic demand and optimize export opportunities," he said. "Bank Indonesia's mix of monetary and macroprudential policies, complemented by accelerated digital payment initiatives, will continue to be synchronized with the government's fiscal stimulus."

Perry also warned of potential risks from global trade tensions, particularly the United States' recent reciprocal tariff policies, which could affect export momentum and business confidence.

The revised BI outlook aligns with forecasts from other institutions. The International Monetary Fund in its April 2025 World Economic Outlook downgraded Indonesia's GDP growth estimate to 4.7 percent for both 2025 and 2026, down from 5.1 percent previously, citing knock-on effects from U.S. trade policy shifts.

The World Bank shares a similar outlook, projecting Indonesia's growth at 4.7 percent in 2025, 4.8 percent in 2026, and 5 percent in 2027.

Still, the government remains ambitious. Finance Minister Sri Mulyani Indrawati said on Tuesday that Indonesia is targeting 5.3 percent growth in 2025, and 5.2 to 5.8 percent growth in 2026, with a longer-term goal of reaching 8 percent by 2029.

Source: https://jakartaglobe.id/business/bank-indonesia-cuts-2025-growth-forecast-after-weak-q1-performanc