Economic growth across all components (except exports) is poised to remain strong in 2024

Robust domestic demand will continue to drive economic activity in 2024

B2C firms should leverage the continued growth in consumer spending this year. They should prioritize the premium segment of their portfolio, as demand from this segment will likely be the strongest. At the same time, they should account for price sensitivity among low- and lower-middle-income segments as cost pressures, though easing, will persist to some extent. Moreover, firms should also expect spending on non-durable goods and services to outpace spending on durable goods, as interest rates will remain elevated this year, even after rate cuts in H2.

B2B firms should anticipate business demand to be strong across key sectors such as food, mining, transport, and construction, driven primarily by domestic demand. However, firms that rely heavily on exports should prepare for demand conditions to remain challenging in 2024.

Additionally, B2G firms should capitalize on strong budget spending by the government this year, especially on infrastructure, as the government accelerates the construction of the new capital city.


  • Indonesia’s GDP growth rose from 5.0% YOY in Q4 2023 to 5.1% YOY in Q1 2024, spurred by resilient domestic demand and high pre-election spending.
  • Household spending rose by 4.9% YOY, driven by strong consumption across most categories (F&B, housing, transport, and services).
  • Gross domestic investment increased by 4.0% YOY, largely due to a 5.5% YOY increase in investment in real estate and a 2.9% YOY increase in investment in machinery and equipment.
  • Additionally, government spending accelerated by a major 19.9% YOY as the government spent heavily on the February 2024 general elections.
  • However, exports of goods and services were weak, rising by only 0.5% YOY.

Our View

Amid a complex and challenging global macroeconomic environment, the Indonesian economy has been a star performer in the APAC portfolio, providing growth opportunities for B2C, B2B, and B2G firms. Looking to the rest of the year, the economy will likely sustain its growth momentum. Domestic consumer spending is projected to remain strong, bolstered by positive consumer sentiment, controlled inflation, and healthy wage growth. Domestic-oriented manufacturing activity will also see further growth, supported by a likely gradual decline in interest rates in H2 2024. However, export-oriented manufacturing will remain under pressure due to major headwinds in key export markets. Additionally, the government will continue to spend heavily under the 2024 budget in key sectors such as education and health. Most notably, infrastructure spending, specifically on the new capital city project, Nusantara, will remain a key priority for the government. Indonesia will also benefit from rising tourist inflows, as well as strong foreign direct investment in key sectors such as metals, mining, and transport amid global geopolitical tensions. We forecast Indonesia’s full-year GDP to grow by 5.0% YOY in 2024.

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