Indonesia’s economy opened 2025 facing mounting domestic and international challenges, with growth slowing to 4.87 percent in the first quarter (Q1) − down from 5.11 percent in the same period last year.

According to Syafruddin Karimi, an economist at the Department of Economics, State Andalas University, this slowdown reflects structural pressures that demand bold and strategic policy reforms.

“The country can no longer rely on government spending and global markets alone,” Karimi said on Monday, May 5, 2025.

Domestically, the government’s early-year fiscal efficiency measures − including cuts to General and Special Allocation Funds (DAU and DAK) − have hampered regional development, delayed village infrastructure projects, and weakened household consumption, which accounts for over 50 percent of GDP.

Externally, the resurgence of Donald Trump in the White House has reignited trade wars, with unilateral tariffs reimposed on developing countries like Indonesia. Key export products − textiles, footwear, metals, and rubber − have been hit hard. China, Indonesia’s top trading partner, is also reducing imports in favor of local substitutes.

With both major export markets under pressure, export stagnation has worsened the outlook.

"This situation underscores the fragility of Indonesia’s current economic structure," Karimi emphasized. “We need to diversify our export destinations and move up the value chain through industrial downstreaming.”

Forecasts suggest Indonesia’s 2025 growth will range between 4.95 percent and 5.05 percent, slightly lower than the 5.05 percent average in 2024. Economists are urging the government to accelerate state spending in Q2, improve investment governance, and engage actively in regional trade diplomacy through RCEP and ASEAN.

“This is not just a test of resilience,” Karimi added. “It is a test of our national capacity to turn crisis into transformation.”