Strengthened domestic demand and a rebound in exports supported Indonesia’s robust growth in 2024. Domestic demand is expected to remain resilient along with the implementation of growth-fostering policies, including new government priority programs, amid a challenging external environment in 2025.
Inflation moderated to 1.6 percent at the end of 2024, averaging 2.3 percent for the year. Inflation remains well anchored within the target corridor of 2.5±1 percent in 2025, underpinned by the close policy synergy between Bank Indonesia (BI) and the government to control inflation.
Resilient trade surpluses and robust foreign investment inflows have bolstered Indonesia’s external position despite global uncertainties, including policy shifts by the new US administration. Meanwhile, domestic policy priorities, fiscal challenges, layoffs in several labor-intensive sectors, and heightened financial market volatilities affected investor sentiment and contributed to downward pressure on the rupiah in early 2025.