By Rahul Trivedi
BENGALURU (Reuters) -Indonesia’s economy likely grew at its slowest pace in nearly four years last quarter as weak household spending weighed on overall growth and offset a boost from exports, according to a Reuters poll of economists.
Southeast Asia’s largest economy likely grew 4.80% in the April-June quarter from a year earlier, slightly below the 4.87% expansion recorded in the first quarter, according to the July 25–August 1 poll of 26 economists. The government is due to announce the figures on Tuesday.
On a quarter-on-quarter basis, gross domestic product (GDP) likely recovered from a 0.98% contraction in the January-March period to 3.70% growth.
“Consumer confidence is waning, industrial activity is slowing and youth unemployment remains high. Real retail sales figures have also been weak throughout the second quarter as households remain cautious about spending due to stagnant real wage growth,” said Jeemin Bang, associate economist at Moody’s Analytics.
Indonesia’s Retail Sales Index contracted 0.3% in April but rose a modest 1.9% in May, indicating subdued household consumption. The government announced an over 24 trillion rupiah ($1.5 billion) fiscal stimulus package in June that included cash handouts and transport subsidies to stoke demand.
Meanwhile, exports rose 11.29% in June, extending a positive trend throughout the second quarter as firms accelerated shipments ahead of a proposed 32% U.S. tariff which was later revised to 19%.
Still, Bang cautioned that although only 10% of Indonesian exports go to the U.S., indirect effects from tariffs on other key trading partners and a weakening global outlook are likely to weigh on growth in the months ahead.
Responding to softening domestic demand and sluggish global trade, Bank Indonesia cut interest rates last month. Governor Perry Warjiyo said the central bank would assess if there was room for further easing.
A separate Reuters poll conducted in July showed economic growth in Indonesia would average 4.8% in 2025, near the lower end of the central bank’s forecast range of 4.6% to 5.4%.
That remains well short of the 8% annual growth target President Prabowo Subianto has pledged to achieve during his five-year term, which began last year.
($1 = 16,488 rupiah)
(Reporting by Rahul Trivedi; Polling by Susobhan Sarkar and Pranoy Krishna; Editing by Raju Gopalakrishnan)
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