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There Is Fasting But Indonesian Economy Is Sluggish, GDP Growth Predicted To Not Reach 5%

Indonesia's economic growth in the first quarter of 2025 is estimated to decline to below 5% even though there is the Ramadan moment and the Eid Al-Fitr Allowance (THR) which is expected to boost the country's economy. 

The Central Statistics Agency (BPS) will announce the economic growth data for the first quarter of 2025 on Monday (5/5/2025). 

The market consensus collected by CNBC Indonesia from 14 institutions estimates economic growth to reach 4.94% (year on year/yoy) and contract 0.9% compared to the previous quarter (quarter to quarter/qtq) in the first quarter of 2025. 

For the record, the Indonesian economy in the fourth quarter of 2024 grew 5.02% yoy. 

If the poll is in line with the results of the BPS announcement, the growth in the first quarter of this year will be classified as quite low or the same as the growth in the third quarter of 2023. 

This is quite worrying because historically, Indonesia's economic growth in the first quarter has generally been at a fairly high level. 

If the Covid-19 pandemic in 2020 and 2021 is excluded from the calculation, Indonesia's average economic growth in every first quarter from 2015 to 2024 is 5.01% yoy. 

Historically, GDP will soar during Ramadan due to a spike in consumption of goods and services. Household consumption contributes around 56% to Indonesia's GDP so that the movement of public consumption greatly affects the rate of the economy. 

For information, consumption contributes around 53.71% to the total Gross Domestic Product (GDP) so that the rate of consumption greatly determines Indonesia's economic growth. 

Bank Mandiri reported that household consumption growth is expected to weaken to below 4.9% (yoy) in the first quarter of 2025, from the previous 5.0% (yoy) in the fourth quarter of 2024. This reflects the tendency of people to spend more carefully, because part of their income is allocated for emergency savings. 

The amount of Third Party Funds (DPK) in the form of individual savings actually increased significantly in March 2025 or during Ramadan and approaching Eid al-Fitr. 

The increase in savings during Ramadan is an anomaly considering that people usually drain their savings during Ramadan due to high consumption. For the record, Ramadan falls on March 1, 2025 and ends on March 30, while Eid al-Fitr falls on March 31, 2025. 

Based on CNBC Indonesia Research's monitoring, as of March 2025, the growth of personal savings deposits was 6.4% year on year/yoy or even higher than the same period in the previous year which only grew by 5.7% yoy. The growth of personal savings deposits in March 2025 was also the highest since November 2022 or around the last 2.5 years. 

Tag: BPS DPK Indonesian THR