Finance Minister: Indonesia's growth in 2025 will be around 5%, despite trade tensions
Indonesia's growth will probably remain around 5% this year despite the trade tensions. The finance minister stated that a government delegation was still negotiating with Washington in order to avoid high tariffs.
Minister's forecast is about the same as last year's growth rate of 5.03%. The government has set a target of 5.2% growth for this year, and President Prabowo Sulbianto has promised to raise the rate to 8% in 2029.
The IMF's latest World Economic Outlook has downgraded Indonesian economic growth estimates for 2025 from 5.1% to 4.7%.
Sri Mulyani's Indrawati made her remarks at a press conference held online by Indonesia's stability council, which is composed of the finance minister, governor of the central bank, chief of the financial services authority, and head of Deposit Insurance Corporation.
Both the Minister and Bank Indonesia Governor Perry Warjiyo attended IMF-World Bank Meetings in Washington.
A delegation headed by Airlangga Hartarto, the chief economist of Indonesia, was also in Washington to try and conclude trade negotiations within 60 days after its April 17 meeting with U.S. officials. This included the U.S. Representative for Trade.
Indonesia offered in these meetings to purchase more American products such as liquefied gas and wheat. It also cut its non-tariff barrier so the United States wouldn't apply a tariff of 32% on Indonesian exports which include apparel, footwear, and electronics.
Sri Mulyani stated that the government would actively engage in early mitigation efforts, including communication with the U.S. Government, and will, as directed by the President, continue deregulation to reduce trade barriers.
She added that "efforts will continue to be made to protect the domestic demand."
Since President Donald Trump announced his hefty tariffs at the beginning of April, Indonesia's financial market has been hit with capital outflows. Sri Mulyani stated that the movements of the rupiah against the U.S. Dollar are expected to remain stable.
In a separate announcement, Minister Airlangga stated that his team had officially started technical negotiations with U.S. equivalents for a tariff framework agreement and would be discussing topics such as market access and tariff estimates.
The Indonesian Economic Ministry said that the USTR had stressed the importance of the final package to be considered by President Trump as the ultimate decision maker.
Sri Mulyani estimated previously that the United States could reduce Indonesia's growth potential by between 0.3 and 0.5 percentage points if they maintain their planned 32% tariff.
The government said that Indonesian exports to the U.S. only account for about 2% its Gross Domestic Product, but the fallout of the trade war may hurt the economy even more.
According to their social media posts, Indonesian Ministers met with U.S. Business People to discuss tariffs. These included executives from mining giant Freeport McMoRan, and Ted Osius the chief executive of the US-ASEAN Business Council. (Reporting and editing by Martin Petty, Sonali Paul and Gayatri Sulaiman)
(source: Reuters)
