1. Indonesia’s Economic Growth
According to Statistics Indonesia (BPS), Indonesia’s economy grew by 5.13% year-on-year in Q1 2025. Although higher than earlier projections (around 4.94%), this growth still reflects economic headwinds, mainly due to global uncertainties spurred by U.S. President Donald Trump's trade policies.

2. Weakening Household Spending and Government Expenditure
Mandiri Bank's Chief Economist, Andry Asmoro, forecasted household consumption growth at only 4.9%, signaling cautious consumer behavior. Government expenditure declined to 3.3% from 4.3% previously, mainly due to slow budget disbursement. Investments also dropped, growing just 1.7% from 4.9% in Q4 2024.

3. Industry Slowdown and Trade War Impact
Indonesia’s manufacturing PMI fell to 46.7 in April 2025—its first contraction since November 2024. Economic Affairs Coordinating Minister Airlangga Hartarto attributed this to the ongoing global trade war. In response, the government is accelerating trade deals such as the IEU-CEPA and deregulating markets to boost exports.

4. Layoffs in Hospitality Sector
The hospitality industry faced a wave of layoffs as the government cut spending. Hotels, particularly those reliant on MICE (Meetings, Incentives, Conventions, Exhibitions), saw demand collapse, resulting in job losses, especially in government-dependent regions.

5. Households Prefer Saving Over Spending
Despite being Ramadan season, personal savings rose sharply by 6.4% yoy in March 2025, based on Bank Indonesia data. This anomaly indicates people are prioritizing saving over spending. Traders in areas like Mangga Dua reported plummeting sales, worse than during the COVID-19 pandemic.

6. Early-Year Deflation
Indonesia recorded monthly deflation of 0.76% in January and 0.48% in February 2025—an unusual trend before Ramadan. BPS clarified this was caused by electricity tariff discounts, not declining purchasing power.

7. Slump in Car Sales
National car sales dropped 5.12% year-on-year in March 2025. Analysts believe this decline shows real macroeconomic pressure, with consumers postponing big purchases like cars and focusing on essentials and saving instead.