Global Economic Slowdown: Implications for Indonesia

The economies of several countries are heading towards recession, raising concerns about a potential slowdown in the global economy, including Indonesia.


Japan recently entered a technical recession, with its economy contracting for two consecutive quarters. This downturn has pushed Japan out of its position as the world's third-largest economy. Japan's economy contracted by 0.4% in Q4-2023, extending its economic woes from a 3.3% contraction in Q3-2023. The consecutive contraction for two quarters is considered an indicator of a technical recession.


The European Commission has revised down its growth and inflation forecasts for the eurozone in 2024. Geopolitical tensions have contributed to increased uncertainty, affecting economic growth forecasts. Germany's economic growth is predicted to be a mere 0.3% in 2024, down from the autumn forecast of 0.8%.

United Kingdom:

The United Kingdom slipped into recession after its economy contracted in Q3 and Q4 2023. Despite a modest 0.1% growth in 2023 overall, this marked the slowest annual growth since 2009, excluding the pandemic's first year.

United States:

In the United States, the Consumer Price Index (CPI) surged in January 2024, driven by soaring housing prices, burdening consumers. The CPI increased by 0.3% in that month, reaching 3.1% on a 12-month basis. The Congressional Budget Office (CBO) predicts a slowdown in US economic growth to 1.5% in 2024, with moderate growth expected thereafter.


Indonesia's economic growth in Q4 2023 reached 5.04% annually, slightly exceeding the government's projection of 5%.

Economic Impact on Indonesia:

The slowdown in the economies of the US, China, Japan, and Germany poses a significant challenge to Indonesia due to their substantial role in exports and investments. The incoming President of Indonesia must anticipate the repercussions of the world's economic giants' slowdowns, as it could threaten Indonesia's economic growth.

According to data from the Central Statistics Agency (BPS), China is Indonesia's largest export market, followed by the US and Japan. Export to China reached US$64.94 billion in 2023, accounting for about 25.1% of total exports. The US ranked second with US$23.25 billion, followed by Japan at US$20.79 billion.


The global economic slowdown, coupled with recessionary trends in key economies, underscores the need for Indonesia to diversify its export markets and strengthen domestic resilience to external shocks. The new administration must implement robust policies to navigate through these challenging economic conditions and ensure sustainable growth for the nation.

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