Jakarta: Indonesia’s economy expanded by 5.03% in 2024, maintaining a steady pace similar to the previous year’s 5.05% but marking the slowest growth rate in three years, according to official data released on Wednesday.
Southeast Asia’s largest economy has consistently grown at around 5% since the COVID-19 pandemic, a solid yet modest pace compared to President Prabowo Subianto’s ambitious 8% target. The growth in 2024 was driven by election-related spending and a rise in investment, which helped counterbalance weaker net exports. Notably, investment growth reached 4.61% year-on-year, the highest rate in six years.
The completion of several major infrastructure projects, including toll roads and dams, under the previous administration also contributed to economic expansion. However, external risks such as potential U.S. tariffs and sluggish global demand could weigh on the country’s economic prospects, prompting Bank Indonesia to lower its 2025 growth forecast to a range of 4.7%–5.5% from an earlier estimate of 4.8%–5.6%.
To stimulate the economy, Bank Indonesia has reduced interest rates twice since September, cutting them by a total of 50 basis points. Meanwhile, Prabowo’s administration has introduced several economic stimulus measures, including electricity tariff discounts, free school meals, and affordable housing initiatives to boost domestic demand.
In the fourth quarter of 2024, Indonesia’s GDP expanded by 5.02% year-on-year, slightly exceeding analysts’ median forecast of 4.98%, and maintaining a similar pace to the 4.95% growth in the previous quarter. Household consumption, which accounts for more than half of GDP, grew 4.98%, up slightly from 4.91% in the third quarter. Investment growth stood at 5.03%, slightly below the 5.15% recorded in the previous three months.
On a quarterly basis, non-seasonally adjusted GDP increased by 0.53% in the fourth quarter compared to the July-September period.
