Indonesia's economic growth next year is expected to stagnate at 5%, with a slowdown expected to begin in the first half of next year, according to a Bloomberg survey of 31 economists conducted between December 19 and 23.

This year, the Indonesian economy is estimated to grow by only 5%, slowing compared to the 5.05% growth achieved in 2023.

Meanwhile, in the fourth quarter of 2024, economic growth is expected to improve slightly, with growth of 4.99% year-on-year (yoy), slightly better than the previous estimate of 4.93%.

However, if this prediction is fulfilled, it would be the worst fourth-quarter performance since the COVID-19 pandemic. By comparison, between 2021 and 2023, fourth-quarter economic growth consistently exceeded 5% annually.

So, what about next year? In the first quarter of 2025, the quarterly growth rate is forecast to contract by 0.69% quarter-on-quarter and only increase by 4.90% year-on-year .

If this prediction comes true, the slowdown will be quite profound, as in the first quarter of 2024, the Indonesian economy grew 5.11% due to seasonal factors such as Ramadan and Eid al-Fitr.

In 2025, the start of Ramadan will also fall in late February, and Eid al-Fitr will arrive in late March. This reflects the seasonal impact of the festive season, which should be reflected in the first quarter of 2025 results.

Meanwhile, the economic growth forecast for the second quarter of 2025 is estimated at only 5% yoy , lower than the previous survey's prediction of 5.05% yoy .

Next, in the third quarter of 2025 and the fourth quarter of 2025, Indonesia's Gross Domestic Product (GDP) growth is predicted to grow by 5% yoy each.

Risk of Recession

What is interesting to note is that, although the Indonesian economy is generally expected to slow down next year, for the first time in recent months, the probability of a recession in Indonesia in the next 12 months has decreased.

Last month, economists estimated the probability at 10%. However, a recent survey in December showed the probability of an Indonesian recession in the next 12 months had shrunk to 5%, based on the predictions of six survey respondents.

Then what about the fate of the rupiah?

Ahmad Mobeen, Senior Economist at S&P Global Market Intelligence, stated that the rupiah is expected to be weaker than previously predicted by the end of 2025. "Furthermore, the possibility of rising global tariffs also reduces the potential for a 25 basis point BI rate cut next year," he said, as reported by Bloomberg News.

In 2025, according to analysis by the Bloomberg Intelligence team of Stephen Chiu and Chunyu Zhang, most Asian currencies will weaken, pressured by the US dollar, especially driven by the trade war instigated by Donald Trump, who was re-elected as the 47th US President.

The rupiah has a psychological level of Rp16,500/US$, which was breached during the Covid-19 pandemic, specifically at Rp16,575/US$. According to Bloomberg Intelligence, this level will be a crucial point.

Source: Bloomberg

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