Economic Update Indonesia: Indonesian Economy Expands at a Rate of 5.02% (Y/Y) in Q4-2024
Indonesia’s economic growth in the fourth quarter of 2024 was slightly better than we had anticipated. Just prior to the release of Indonesia’s gross domestic product (GDP) data on 5 February 2025 (by Badan Pusat Statistik, BPS), we revised our outlook for Indonesia’s Q4-2024 economic growth from 5.0 percent year-on-year (y/y) to the range of 4.9–5.0 percent (y/y) due to a number of weaker-than-estimated macroeconomic data.
However, BPS announced that the country’s GDP growth reached 5.02 percent (y/y) in Q4-2024, just above our revised outlook. In full-year 2024, GDP growth reached 5.03 percent (y/y), in line with our outlook.
External Environment
Overall, conditions in Q4-2024 didn’t really seem to differ from the previous quarter in the sense that the Russo-Ukrainian war and Israel-Hamas war were still ongoing, the economy of China (which is the biggest trading partner of Indonesia) remained shaky, and commodity prices generally moved sideways.
What changed was that the US Federal Reserve became a bit more aggressive in Q4-2024 in terms of interest rate cuts, imposing two quarter percentage points rate cuts in the last quarter of 2024. This consequently also allows other central banks to cut their benchmark interest rates. However, it usually takes a couple of months before rate cuts are felt in the real economy, and so the lower credit rate environment will not be able to lift economic growth in Q4-2024.
What also changed in Q4-2024, and which –too– originates from the United States, is that Donald Trump won the 2024 presidential election that was held in November 2024. While this increased chances of seeing an end to warfare in the Middle East and Eastern Europe, it gave rise to concern over an escalating trade war as Trump had already threatened to raise tariffs (which is bound to drag down international trade and global economic growth) on a number of countries (including China).
With the external environment remaining relatively unchanged, something that is reflected in the continuation of rising exports (and imports), it is up to the domestic market of Indonesia, (foreign and domestic) investment realization and government spending to make a real difference for the economy. In this article we zoom in on all GDP components of Indonesia to give a comprehensive overview of the performance of the country’s national economy in Q4-2024.
Indonesia’s Q4-2024 GDP in Current and Constant Prices
Based on current prices, Indonesian GDP reached IDR 5,675.1 trillion (approx. USD $360.3 billion) in Q4-2024 (using an IDR 15,750 per US dollar exchange rate). This is a 7.0 percent (y/y) increase from the same quarter one year ago, amid improving macroeconomic conditions. Particularly the acceleration in household consumption in Q4-2024 is noteworthy.
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