(May 5): Indonesia’s economic growth accelerated in the first three months of the year to the fastest pace since the third quarter of 2022, displaying resilience even as the prolonged war in Iran begins to weigh on global growth.
Gross domestic product rose 5.61% in the January-March period from a year earlier, the statistics agency said on Tuesday. That beat both the 5.4% median estimate in a Bloomberg survey of economists and the 5.39% growth print in the final quarter of 2025.
Southeast Asia’s largest economy was largely supported by domestic demand as households ramped up spending during the Eid holidays, helped by seasonal bonuses and fiscal stimulus.
Household consumption, which accounts for more than half of GDP, grew 5.52% in the first quarter — that’s the fastest pace since 2022, according to data compiled by Bloomberg.
Measures such as spending at restaurants and hotels and electronic payments strengthened in the quarter, statistics chief Amalia Adininggar Widyasanti said in a briefing, noting that agricultural production, manufacturing and domestic and foreign investment continued to grow.
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Government expenditure increased by 22% as authorities pushed to disburse spending more evenly throughout the year, though investment and export growth slowed from the previous quarter.
On the production side, all industries grew last quarter except mining, she said. The manufacturing, trade, agriculture, construction and mining sectors remained the largest overall contributors, accounting for more than 60% of Indonesia’s economy.
Robust domestic activity has helped keep Indonesia relatively insulated as hostilities in the Middle East have stalled the flow of key commodities like fuel and fertiliser. Singapore and Malaysia both reported slower-than-expected growth last quarter while Thailand slashed its growth target for this year due to the spike in energy costs.
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As a net energy exporter, Indonesia benefits from higher commodity prices. The government’s generous energy subsidies — despite the strain on its budget — softens the blow on consumers by keeping the prices of most fuels, cooking gas and electricity low. Cost pressures are emerging elsewhere, though, including in plastics and cooking oil. A weaker rupiah is also making imported raw materials more expensive.
The economy’s resilience gives Bank Indonesia room to focus on stabilising the rupiah, which has set successive record lows amid growing fiscal concerns and global volatility. The central bank kept its policy rate unchanged at 4.75% last month, with analysts expecting it to maintain that stance throughout the year if currency pressures persist.
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