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Alarm For Government, Early Economic Indicators For 2025 Worsen

Several macroeconomic indicators in early 2025 showed that the Indonesian economy was facing pressure, both externally and domestically. Deflation, depressed rupiah exchange rate, collapse of the stock market, and anomalies in state budget revenues were alarms for the government to act. The Central Statistics Agency (BPS) noted that the Consumer Price Index (CPI) experienced monthly deflation in January and February 2025. Although there was annual inflation of 0.76 percent, the CPI in January 2025 experienced monthly deflation of 0.76 percent. 

The trend continued in February 2025, which recorded monthly deflation of 0.48 percent. Deflation also occurred annually, namely 0.09 percent. The last time annual deflation occurred was 25 years ago, precisely in March 2000, at 1.10 percent. 

On the other hand, the movement of the rupiah exchange rate based on the Jakarta Interbank Spot Dollar Rate (Jisdor) at the beginning of the year was in the range of IDR 16,200-IDR 16,500 per US dollar, and even touched the level of IDR 16,575 per US dollar on February 28, 2025. The last time the rupiah was hit to the level of IDR 16,500 per US dollar was five years ago. At the end of February 2025, the Composite Stock Price Index (IHSG) also fell to the level of 6,300 or corrected 5 percent compared to the closing of trading in the previous week. This is also the lowest record since 2021. Meanwhile, the Ministry of Finance also reported that the realization of the 2025 State Budget until February 2025 recorded a deficit of IDR 31.2 trillion or 0.13 percent of gross domestic product (GDP). The anomaly at the beginning of the year was caused, among other things, by the decline in tax revenues. 

Executive Director of the Center of Reform on Economics (CORE) Indonesia Mohammad Faisal said that various indicators indicate that the economic conditions are deteriorating. Although there are inherited factors from the previous regime, the current government's policies are actually inappropriate and have the potential to cause new problems. He gave an example of the issue of the weakening middle class that had occurred before 2024. When the Prabowo government came in, the problem was not handled with the right policies. Instead of solving the problem, new problems emerged. "Starting from fiscal, spending that exceeds capacity, plus revenues that are now plummeting," he said when contacted from Jakarta, Thursday (3/13/2025). 

There are also several policies from the beginning of the Prabowo administration until now that have attracted public attention. The back and forth of the Value Added Tax (VAT) rate increase policy, budget efficiency, and the emergence of various corruption cases have raised doubts among the public, business actors, and investors in seeing the condition of Indonesia. According to Faisal, this situation will make economic growth this year potentially lower than expected or below 5 percent. Instead of accelerating higher growth as expected, various government policies can actually suppress economic growth. 

Tag: BPS Central Statistics Agency Early Economic Indicators For 2025 Worsen