Indonesia’s economic forecast shows renewed strength following a significant 16% year-on-year investment growth in the first quarter of 2025.
The Ministry of Investment reported that total realized investment reached IDR 465.2 trillion (approximately USD 29.4 billion), surpassing the previous year’s first-quarter figure of IDR 401.5 trillion. This performance marks 24.4% of the national investment target for 2025, set at IDR 1,905.6 trillion (USD 120.5 billion).
President Prabowo Subianto’s administration attributes this achievement to growing investor confidence and ongoing economic stability. “This is a positive number. It shows that international and domestic confidence remains strong. Investment is a long-term commitment, and under President Prabowo’s administration, we’re seeing stability that allows us to meet our targets,” said Rosan Roeslani, Minister of Investment and Head of BKPM.
Q1 2025 Investment Growth Hits IDR 465.2 Trillion
Indonesia’s investment figures in Q1 2025 reflect a strong start to the year. The IDR 465.2 trillion (USD 29.4 billion) invested includes nearly equal contributions from Foreign Direct Investment (FDI) and Domestic Direct Investment (DDI). FDI accounted for IDR 230.4 trillion, or 49.5% of the total, while DDI slightly surpassed it with IDR 234.8 trillion, or 50.5%.
Regional investment distribution also highlighted balanced development. Java received IDR 229.3 trillion (49.3%), while regions outside Java attracted IDR 235.9 trillion (50.7%). In addition, the investment created jobs for 594,104 Indonesians, a year-on-year increase of 8.5%.
Strong Start Shapes Indonesia’s Economic Forecast
The promising investment performance is directly influencing Indonesia’s economic forecast for 2025. Officials are optimistic about meeting the year-end target, as nearly one-fourth of the goal has already been achieved in just three months.
“Alhamdulillah, in Q1 we have met Bappenas’ target, which is IDR 1,905.6 trillion for the year. In this quarter, the amount already realized is IDR 465.2 trillion, which is around 24.4% of the target,” Rosan added during a press briefing at the Presidential Palace, as reported by CNBC Indonesia.
Government stability under Prabowo’s leadership has played a key role in encouraging investor commitment. Rosan emphasized, “This is encouraging news reflecting confidence from the international community and at home.”
Global Uncertainty and the 2025 Forecast Revisions
Despite this positive momentum, global economic risks still cast shadows over Indonesia’s outlook. U.S. President Donald Trump’s decision to impose 32% reciprocal tariffs on Indonesian imports, among others, is expected to weigh on the country’s export-driven growth.
Finance Minister Sri Mulyani explained the broader impact: “The financial system remained stable in Q1 2025, amid rising global economic and financial market uncertainties.” She warned, “This uncertainty is primarily driven by U.S. government tariff policy dynamics, escalating the trade war as we enter Q2 2025.”
The move has triggered capital shifts and risk aversion among investors, leading to a decline in U.S. Treasury yields and a weaker dollar index (DXY).
Institutions Adjust Indonesia Economic Forecast
Several international institutions have revised their outlook on Indonesia’s growth in 2025. Bank Indonesia projects growth to hover near the lower end of its 4.7% to 5.5% range. Governor Perry Warjiyo stated, “Growth will be slightly below the midpoint of the 4.7%-5.5% range due to U.S. tariffs impacting our exports and lowering external demand.”
The International Monetary Fund (IMF) also lowered its forecast to 4.7% for both 2025 and 2026. IMF Chief Economist Pierre-Olivier Gourinchas warned, “If tariffs and accompanying uncertainty continue, global growth will be significantly hindered.”
Meanwhile, the World Bank maintains a 5.1% growth estimate, and the Asian Development Bank (ADB) holds steady at 5.0%. However, both institutions noted the importance of domestic reform and public investment to offset global headwinds.
Government Response and Policy Commitments
President Prabowo has rejected criticisms that Indonesia’s economy only appears strong on paper. As citerd by Detik.com, During a public event, he stated, “Some say I’m being misled by my ministers. Some say our economy is only good on paper. That’s not true. It’s right before our eyes. Our economy is strong and will get stronger.”
He emphasized the importance of food security and equitable wealth distribution. “If our food supply is secure, the country is secure. No need to worry about stocks going up or down,” Prabowo added.
As the government doubles down on infrastructure, domestic investment, and food resilience, officials remain hopeful that Indonesia can weather global challenges and stay on track with its economic goals.
Source: cnbcindonesia.com, finance.detik.com
Image: jpnn.com / Presidential Palace Press Bureau documentation
