• Key policy rate: 5.75% (March 2025)
• GDP growth rate: 5.03% (2024)
• 2025 GDP growth target: 5.2%
• Manufacturing Purchasing Managers’ Index reading: 52.4 (March 2025)
• Inflation rate: 1.03% (March 2025)

Indonesia has managed to keep a strong growth momentum, with only a shallow contraction seen in 2020 due to the COVID-19 pandemic. The economy expanded by 5 per cent annually between 2022-2024, and it remains on track to sustain this expansion with strong domestic activity across industries.  

Household consumption accounts for more than half of economic activity, largely supported by easing inflation. Meanwhile, private sector investments accounted for 29 per cent of Indonesian GDP and government spending accounted for about 7 per cent. The government has committed to sustain public investments in infrastructure alongside funding the USD 32-billion development of Nusantara as the new national capital, a project started by former President Joko Widodo and inherited by his successor, Prabowo Subianto.

In terms of global trade, Indonesia is a net exporter, with China as its biggest market. The country’s main products are coal, palm oil, nickel, and minerals, which has prompted the government to restrict nickel ore exports in hopes that domestic mineral processing will take off. This has led to an above-4 per cent annual growth in the mining and quarrying industry, now accounting for a tenth of Indonesian GDP. The country is also the world’s biggest nickel producer.

Indonesia aims to develop a domestic electric vehicle supply chain to boost manufacturing output and contribute to sustainability initiatives. The manufacturing industry contributed just under 20 per cent of Indonesian GDP, while the agriculture sector accounted for about 13 per cent of domestic activity. 

House view: Indonesia, along with its developing peers in Southeast Asia, will serve as a global growth leader for the years ahead. In particular, its vast mineral reserves is a distinct growth driver that can support the country’s expansion. Lundgreen’s remains optimistic towards this market and puts overweight risk toward Indonesian assets.

Updated as of 22 April 2025