Ada Apa dengan Ekonomi Indonesia?

Summary

Indonesia's economic growth in 2025 has stagnated at 5%, with Finance Minister Sri Mulyani announcing a fiscal deficit of over 30 trillion IDR in the first two months of the year. This deficit is partly due to a significant drop in tax revenue, largely driven by issues in tax collection and the informal sector's growth. While government spending is in line with projections, the challenge lies in sustaining economic growth beyond seasonal factors like holidays. Experts emphasize the need for long-term industrial growth, investment in human capital, and improving infrastructure to boost productivity and maintain economic momentum.

Takeaways

• 😀 Indonesia's economy enters 2025 with stagnant growth at 5%, with significant fiscal challenges including a budget deficit of approximately 30 trillion IDR.
• 😀 Minister of Finance Sri Mulyani announced a tax revenue shortfall, particularly from the corporate sector and PPH 21, highlighting a decline in formal sector employment.
• 😀 Despite the deficit, government spending was not significantly higher compared to last year, and the main issue lies in reduced tax revenue collection.
• 😀 Deflation of -0.09% was recorded in February 2025, the first in 25 years, indicating weak demand despite festive seasons that typically boost consumption.
• 😀 Economic activity during January and February fell below expectations, leading to concerns over potential inventory issues and reduced manufacturing expansion.
• 😀 The government aims to address shortfalls in tax collection, with hopes of recovery by April and May through improved tax mechanisms.
• 😀 Seasonal economic factors like Idul Fitri and year-end holidays contribute to temporary growth, but there is concern over the sustainability of relying on these factors.
• 😀 To achieve long-term growth, Indonesia must improve industrial productivity and support the formal sector, which has been underperforming, with a decline in industrial GDP contribution from 26% to 18-19%.
• 😀 The government has shifted focus to reallocating budget expenditures towards more productive sectors, including infrastructure and human capital, to boost productivity and attract investment.
• 😀 The target of 8% economic growth for the coming years is ambitious, requiring substantial domestic and foreign investment, as well as a stronger absorptive capacity to maximize the impact of incoming investments.

Q & A

What was the economic growth rate of Indonesia as it entered 2025?

Indonesia's economy entered 2025 with a stagnated growth rate of 5%.

Why did Indonesia's 2025 APBN experience a deficit early in the year?

The APBN deficit in early 2025 was largely due to a significant drop in tax revenue, caused by issues in the tax collection system, particularly in January, where it fell by 41-42%.

What role did Kortex play in the economic situation during the first two months of 2025?

Kortex, which caused a severe disruption to Indonesia's tax collection system in January, was a major contributor to the deficit. However, by February, there were improvements, though tax revenue still remained 30% lower than expected.

How did the performance of the formal sector, particularly in terms of PPH 21, affect the economy?

The decline in PPH 21, a key indicator of the formal sector, signaled economic troubles. It showed that employment opportunities in the formal sector were shrinking, contributing to economic stagnation.

What were the government’s actions in response to the deficit in early 2025?

The government focused on frontloading spending in early 2025 for priority projects, but despite this, expenditure was not significantly higher than the previous year. The main problem was the shortfall in revenue, particularly from taxes.

How did deflation in February 2025 reflect on Indonesia's economy?

Indonesia experienced deflation of -0.09% in February 2025, the first deflation in 25 years. This indicated weak demand, as consumer confidence and purchasing power were low, even though supply-side measures were controlling prices.

Why was consumer confidence in Indonesia low in early 2025 despite expectations of higher demand?

Consumer confidence fell in early 2025 due to suboptimal demand, despite being a period that typically sees increased consumption. This was partly because the demand failed to meet expectations, impacting both economists and producers.

What is the impact of seasonal factors, like Idul Fitri, on Indonesia’s economic growth?

Seasonal factors, like Idul Fitri, provide a temporary boost to the economy. However, if Indonesia continues to rely on these moments for growth, it may not result in sustainable economic expansion. The challenge is maintaining momentum outside of these seasonal peaks.

What suggestions were made for Indonesia to achieve sustained economic growth beyond seasonal factors?

To achieve sustained growth, Indonesia should focus on strengthening its industrial sector and increasing formal employment. Stimulating consumer spending in the middle-to-upper class, which has been avoiding risk and investing in safe assets like gold, is also crucial.

What is the government's strategy to improve industrial productivity and sustain economic growth?

The government is focusing on reallocating budgets from unproductive sectors to more productive ones, and strengthening the industrial sector by improving its financing. Additionally, investment in human capital, infrastructure, and institutional capacity is essential to better absorb foreign investments and ensure long-term sustainability.