Economy ends 2024 on a high note

Economic growth remains robust: GDP growth picked up to 5.0% year on year in the fourth quarter from 4.9% in the third quarter, broadly in line with market expectations. On a seasonally adjusted quarter-on-quarter basis, the economy grew 0.5% in Q4, down from Q3’s 1.5% rise. Meanwhile, over 2024 as a whole, GDP growth matched 2023’s 5.0%, in line with market forecasts.

Household spending underpins Q4’s uptick: Looking at domestic activity, Q4’s annual acceleration was chiefly due to household spending, which grew 5.0% year on year and marked the best reading since Q3 2023 (Q3: +4.9% yoy). Less positively, public consumption growth waned to 4.2% in Q4 (Q3: +4.6% yoy). Moreover, fixed investment growth edged down to 5.0% in Q4 from 5.2% in the previous quarter. On the external front, exports of goods and services growth fell to 7.6% in Q4, marking the worst reading since Q1 2024 (Q3: +8.8% yoy). In addition, imports of goods and services growth moderated to 10.4% in Q4 (Q3: +11.9% yoy).

GDP growth to remain strong: The economy should expand at a pace close to 2024’s level in 2025. Private spending and fixed investment should gain momentum thanks to lower interest rates, but public spending will lose steam, and exports growth will ease due to increasing trade tensions. Weaker-than-expected external demand poses a downside risk to economic momentum, while stronger-than-anticipated public spending under President Prabowo Subianto is an upside risk.

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Download one of our sample reports to visualize what a Consensus Forecast is and see our Indonesian government consumption projections.

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