Indonesian Economy Fails To Grow 5%, Luhut Admits Government Underspending

Chairman of the National Economic Council (DEN) Luhut Binsar Pandjaitan revealed that one of the main factors of the current slowdown is the contraction of government consumption. As is known, Indonesia's economic growth reached 4.87% (yoy) in the first quarter of 2025 

Luhut ensured that the government was aware of the existing problems and had taken steps to overcome them. According to him, President Prabowo will act to fix this problem. In the future, he said the government would accelerate spending. 

"The important thing is that we already know the problem, and the president has addressed that we will fix this. Therefore, accelerating state spending is key," he said in a video uploaded to Instagram @luhut.pandjaitan, quoted Wednesday (7/5/2025). 

Luhut also emphasized that the Nutritious Meal Program (MBG) is one of the important drivers for accelerating state spending. He is sure that the real impact of MBG will be created, one of which is reviving the village economic hub; vegetable farmers, chicken farmers, egg sellers, to local MSME actors. 

In addition, he is aware of other problems, namely the slowdown in household consumption, suboptimal investment and export pressure due to global effects, as well as uneven regional growth 

"This all reminds us that equality and acceleration must be carried out simultaneously," he said. 

According to him, President Prabowo Subianto has ordered Ministries and Institutions to immediately deregulate various existing regulations. This step was taken to increase investment in Indonesia. 

"President @prabowo's direction was very clear yesterday; simplify regulations, strengthen trade partnerships, and maintain a balance in global economic relations, while ensuring protection for the common people," he added. 

Therefore, he appealed to the public not to worry about Indonesia's economic growth of below 5% and not to blame each other. 

"Therefore, we all need to maintain a spirit of togetherness. In a situation like this, it is not the time to blame each other. We need real work, cross-sector collaboration, and the courage to make important decisions," said Luhut. 

He also said that economic growth conditions below 5% are normal during the government transition period. He explained that the Indonesian economy's condition below 5% had already occurred during the 2014 government transition period, where in the first and second quarters it also grew below 5%. 

"Everyone needs to know that this pattern is not new. Because during the 2014 government transition period, the first and second quarters also grew below 5%. This means that in an adjustment period like this, a slowdown can occur," Luhut emphasized. 

Tag: DEN Indonesian Economy Luhut Binsar Pandjaitan Prabowo Subianto