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Indonesia
This Week in AsiaEconomics

Indonesia’s economy slows as US tariffs, fiscal pressures challenge Prabowo’s growth goal

Analysts expressed concerns that fiscal pressures, weak consumer spending, and the impact of US tariffs could worsen Indonesia’s economic outlook

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Indonesian President Prabowo Subianto speaks during a press conference in Kuala Lumpur in January. Photo: AP
Amy Sood
Indonesia’s economy posted its slowest growth rate in over three years, with analysts warning that fiscal pressures, sluggish consumer spending, and the ripple effects of American tariffs could further dampen the country’s economic outlook this year.

According to official data released by Statistics Indonesia on Monday, the economy grew by 4.87 per cent year on year in the January to March period, down from 5.02 per cent the previous quarter.

The slowdown could challenge President Prabowo Subianto’s pledge to increase annual growth in Southeast Asia’s largest economy to 8 per cent by the end of his five-year term in 2029, analysts say.
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Prabowo’s administration is contending with external pressures, including global economic headwinds from the US-China trade war and the threat of Washington’s hefty “reciprocal” tariffs, slated for 32 per cent.

Economists note that tightening fiscal constraints are hindering domestic growth. At the beginning of the year, Prabowo’s government implemented spending cuts and reallocations to finance his flagship programmes, leading to a slowdown in public spending.

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These programmes include a US$4.4 billion allocation this year for a free meal initiative for children and expectant mothers, as well as a controversial new sovereign wealth fund with an initial commitment of US$20 billion.
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