The latest development of Indonesia’s economy might suggest the occurrence of secular stagnation. Having no new source of growth, Indonesia prolonged its long-term growth trend of around 5% since 2014 in the second quarter of 2024 (excluding the COVID-19 period). During the first half of 2024, Indonesia was not able to grow considerably beyond a 5% rate despite having two consecutive quarters with seasonal boosters. In Q1-2024, Indonesia held Presidential and legislative elections and had a Ramadhan period, while Ied Al-Fitr, religious and school holidays occurred in the second quarter of 2024. This phenomenon might suggest a more worrying condition as there might be a risk for Indonesia only to be able to grow below 5% without seasonal factors. Indonesia’s GDP grew slower from 5.11% (y.o.y) in Q1-2024 to 5.05% (y.o.y) in Q2-2024. As GoI’s spending significantly decelerated from the first quarter to the second quarter of 2024 after the effort to speed up infrastructure completion projects and enhanced spending preceding the election period, Indonesia’s GDP growth declined. The dominance of government spending in the growth figure might verify the lethargic productivity of economic sectors in Indonesia.

Link: Indonesia Economic Outlook 2025: Secular Stagnation