In q1 2025, Indonesian economy under pressure, growth slows to 4.87pc
Indonesia’s economy opened 2025 facing mounting domestic and international challenges, with growth slowing to 4.87 percent in the first quarter (Q1) − down from 5.11 percent in the same period last year.
According to Syafruddin Karimi, an economist at the Department of Economics, State Andalas University, this slowdown reflects structural pressures that demand bold and strategic policy reforms.
“The country can no longer rely on government spending and global markets alone,” Karimi said on Monday, May 5, 2025.
Domestically, the government’s early-year fiscal efficiency measures − including cuts to General and Special Allocation Funds (DAU and DAK) − have hampered regional development, delayed village infrastructure projects, and weakened household consumption, which accounts for over 50 percent of GDP.
Externally, the resurgence of Donald Trump in the White House has reignited trade wars, with unilateral tariffs reimposed on developing countries like Indonesia. Key export products − textiles, footwear, metals, and rubber − have been hit hard. China, Indonesia’s top trading partner, is also reducing imports in favor of local substitutes.
With both major export markets under pressure, export stagnation has worsened the outlook.
“This situation underscores the fragility of Indonesia’s current economic structure,” Karimi emphasized. “We need to diversify our export destinations and move up the value chain through industrial downstreaming.”
Forecasts suggest Indonesia’s 2025 growth will range between 4.95 percent and 5.05 percent, slightly lower than the 5.05 percent average in 2024. Economists are urging the government to accelerate state spending in Q2, improve investment governance, and engage actively in regional trade diplomacy through RCEP and ASEAN.
Adepts urge Nepal to diversify economic diplomacy beyond India and China
Adepts have emphasised an urgent need for Nepal to diversify its economic diplomacy beyond India and China, and to go further than its traditional focus on tourism and hydropower, in the country’s pursuit of sustainable economic development.
“Nepal suffers a triple deficit with India—trade, remittance, and capital. Nepalis working in India earn less than Nepal’s per capita income, while Indians working here earn more than their own per capita income. The same applies to China,” said Biswash Gauchan, executive director of the Institute for Integrated Development Studies, speaking at an interaction in Kathmandu on Friday.
He pointed out that although India allocates a budget for Nepal each year, only 24 percent of it is utilised. “On average, Nepal receives only IRs1.8 billion from the allocated amount, and even that is mostly spent on political gatherings as it is distributed through the Indian Embassy. It does not contribute significantly to development,” Gauchan said.
Gauchan also highlighted that although India pledged $1.4 billion for post-earthquake reconstruction, Nepal has received only 1 percent of it. Similarly, China committed Rs56 billion during President Xi Jinping’s visit to Nepal in 2019, but there has been no transparency or progress regarding the pledged support.
China slides deeper into economic weakness
China is sliding deeper into economic weakness that is being worsened by its response to external shocks.
Tariffs are drying up international demand for Chinese goods, and in a bid to keep factories alive, Beijing is urging exporters to turn inward. However, that pivot is compounding the very problem it aims to solve.
Chinese authorities have been positioning the domestic market as a pressure-release valve for the manufacturing sector. But the influx of export-grade inventory is creating excess at home in a consumer environment that is already highly restrained.
This is accelerating a destructive process: prices are falling, and not because productivity is rising or technology is improving. They’re falling because companies are desperate to shift stock and survive.
Deflation isn’t an abstract threat in China anymore—it’s visible across the economy. After barely holding above zero for much of 2023 and 2024, consumer prices have now dropped for two straight months.
Producer prices have fallen for 29 consecutive months. March’s figures showed the sharpest drop in four months, and forecasts point to an even steeper decline in April.
The problem is a lack of confidence and the mismatch between oversupply and tepid demand is becoming more entrenched.
Redirecting unsold exports to domestic platforms at steep discounts might appear clever in the short term. But when that becomes a strategy, it turns into a liability. It breaks pricing power across sectors, weakens earnings and sets the stage for another round of cost cuts.
Major e-commerce platforms are fully behind this shift. JD.com has committed the equivalent of US$28 billion to boost domestic sales of export-surplus goods, offering discounts of up to 55 percent. The public message is one of resilience and opportunity, yet the underlying dynamic is more fragile.
The jobs market remains under pressure, with wage growth uneven. Consumers are cautious, not just about big-ticket items, but also everyday spending. The property sector is still under strain, dragging on household wealth and appetite. So even as goods pile up and prices drop, buyers aren’t stepping in with force.
Pakistan warns India against harming agricultural based economy
Pakistan’s Ambassador to the United States, Rizwan Saeed Sheikh on Tuesday stated that any attempt to harm Pakistan’s agriculture-based economy, which comprises 240 million people, would be considered a declaration of war.
Ambassador Sheikh briefed representatives of an American think tank on the tense situation between Pakistan and India, reiterating the demand for an impartial and transparent probe into the Pahalgam incident.
The Pakistani ambassador said that India had not presented any evidence regarding the Pahalgam incident to either Pakistan or the international community, and that India’s war hysteria was endangering regional peace.
He emphasised that Pakistan was one of the countries most affected by terrorism and that it believed in peace with dignity and honor.
He further stated that India’s conduct regarding the Indus Waters Treaty was based on lawlessness, and that such unlawful behavior had always been a hallmark of India’s actions, not just recently.
Earlier, the UN Security Council held a closed-door meeting called by Pakistan — currently a non-permanent member of the powerful 15-nation Council — which is locked in a war-like tension with India following a deadly Kashmir attack and New Delhi’s suspension of key water treaty with Islamabad.
Bangladesh’s GDP to grow 6.5pc: IMF
The International Monetary Fund (IMF) has maintained its economic growth forecast for Bangladesh at 3.8 percent for the current fiscal 2024-25, consistent with its December projection, but anticipates a stronger recovery, forecasting growth of 6.5 percent in FY26.
The multilateral lending agency also projected Bangladesh’s inflation to remain elevated, reaching 10 percent in FY25, before cooling down to 5.2 percent in the next fiscal year, according to its latest edition of the World Economic Outlook released (22 April).
However, the inflation projection for FY25 is lower than the December forecast of 11 percent.
The IMF’s projection comes after the Asian Development Bank (ADB), in its latest Asian Development Outlook, expected Bangladesh’s economy to grow by 3.9 percent in FY25, before increasing to 5.1 percent in FY26. The ADB also warned that the 12-month average inflation in Bangladesh is expected to rise further to 10.2 percent in FY25, before easing to 8 percent in the next fiscal year.
The Manila-based lender also stated that the enduring inflation remains a significant hurdle due to market inefficiency brought on by regulatory shortcomings, restrained competition in wholesale markets, insufficient market information, supply chain constraints, and depreciation of the taka.
In December last year, the government revised its GDP growth projection for FY25 downward to 5.25 percent, from the initial estimate of 6.75 percent, due to ongoing financial crisis and political volatility following the government changeover.
Abu Dhabi leads economic delegation
Aiming to enhance ties, Abu Dhabi’s delegation explores cooperation and investment opportunities with Japan.
In a significant move to strengthen economic ties with Japan, the Abu Dhabi Department of Economic Development (ADDED) is leading a high-level economic delegation to Japan from May 6 to May 9, 2025. This initiative is part of Abu Dhabi’s broader strategy to enhance cooperation across various industries and high-growth sectors, reflecting the emirate’s commitment to becoming a global economic powerhouse.
The delegation, organized in collaboration with the UAE Embassy in Tokyo, comprises over 80 senior officials and executives from government entities, private sector companies, and startups. Notable participants include the Department of Culture and Tourism – Abu Dhabi, Abu Dhabi Securities Exchange (ADX), Abu Dhabi Global Market (ADGM), and the Abu Dhabi Investment Office (ADIO), among others.
His Excellency Ahmed Jasim Al Zaabi, Chairman of ADDED, expressed enthusiasm about the delegation, stating, “Abu Dhabi’s soaring Falcon Economy is solidifying the emirate’s status as a rising economic powerhouse and a premier destination for global talent, high-value investments, and world-class enterprises. As part of initiatives to future-proof the economy, we are strengthening partnerships with leading economies and top trading partners around the globe, as well as investing in advanced industries, R&D, and entrepreneurship.” This commitment is underscored by the impressive growth in trade between the UAE and Japan.
Over the past five years, trade between the UAE and Japan has grown at a compound annual growth rate (CAGR) of 11.9 percent. During the same period, non-oil exports from the UAE to Japan increased at a CAGR of 8.8 percent, while imports rose at a CAGR of 12.2 percent. Furthermore, UAE investments in Japan have more than doubled, with the UAE attracting over 80 percent of Japanese investments in the Middle East.
The upcoming visit is also significant due to the anticipated signing of the UAE-Japan Comprehensive Economic Partnership Agreement (CEPA), expected to be finalized later this year. This agreement aims to unlock new opportunities across various sectors, fostering the exchange of expertise and technology and opening new markets for businesses in both countries.
During their time in Japan, the delegation will participate in key events, including Expo 2025 Osaka, SusHi Tech – Tokyo, and the 11th Abu Dhabi Japan Economic Council (ADJEC) meeting. They will also host the Abu Dhabi Investment Forum (ADIF) and the Abu Dhabi-Tokyo Business Forum, which aim to enhance cooperation and attract talent, business, and investment to Abu Dhabi.
Malaysia’s exports impacted more by global economy
Malaysia’s trade minister said on Tuesday that the country’s exports will be impacted more by global economic growth and trade than by currency fluctuations.
Trade Minister Tengku Zafrul Aziz said exports rose significantly in the first quarter of 2025 as companies were frontloading orders to get ahead of US tariffs, which were announced by President Donald Trump in early April.
“What will support the exports more is actually the growth of the global economy and the growth of global trade… more so than the currency fluctuation,” Tengku Zafrul said at a press conference.
Malaysia’s exports rose a better-than-expected 6.8 percent in March from a year earlier, with shipments to the United States rising to a record high of 22.66 billion ringgit ($5.4 billion).
Maldives unveils $9b crypto hub plan
In a bold move, the island nation has inked a $9 billion deal with Dubai-based MBS Global Investments to build a massive tech hub in its capital, Malé. Think of it as planting a digital seed in the middle of the Indian Ocean with hopes it grows into a towering tree of economic transformation.
The project, dubbed the Maldives International Financial Centre, is expected to span an area roughly the size of 150 football fields and create up to 16,000 jobs. Over the next five years, this venture aims to shift the country’s economic engine away from tourism and fishing—Maldives’ traditional lifelines—and toward cutting-edge technologies like blockchain and Web3.
However, the Maldives is entering a race already in full sprint. Picture the global crypto arena as an Olympic track where powerhouses like Dubai, Singapore, and Hong Kong have not only taken off from the blocks but are already setting pace. Each of these financial hubs has built reputations as innovation-friendly zones, with clear rules and heavy investment—making it a challenge for newcomers to keep up.