FX.co ★ Fitch Cuts 2025 Indonesia Growth Forecast to 4.9%

Fitch, the global rating agency, has adjusted its growth projection for Indonesia in 2025, scaling it down to 4.9% from the previously estimated 5%. The agency also anticipates a growth rate of 4.7% for 2026, attributing these adjustments to ongoing global trade tensions and a decline in consumer spending. Thomas Rookmaaker, speaking to Reuters, highlighted the challenges in achieving a 5% growth rate this year, given the considerable global economic uncertainties and issues surrounding tariffs. A potential drop in state revenue could restrict the government's capacity to bolster growth, amidst a notable slowdown in household spending, which has reached its lowest rate in five quarters. Indonesia is also confronting the imposition of a 32% tariff on its exports to the United States, unless negotiations successfully reduce this rate prior to the expiration of a moratorium in July. Despite these challenges, the government aims for a 5.2% growth target for 2025, compared to last year's growth of 5.03%. Notably, the economy witnessed a year-on-year growth of 4.87% in Q1 2025, marking the slowest increase since Q3 2021. Indonesia's finance minister has indicated that the new U.S. tariffs could potentially decrease GDP growth by 0.3 to 0.5 percentage points.