Fitch says "challenging" for Indonesia to grow 5% this year
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FILE PHOTO: A container is unloaded from a ship onto a truck at Tanjung Priok Port in Jakarta, Indonesia, February 12, 2025. REUTERS/Willy Kurniawan/File Photo
JAKARTA (Reuters) -It will be a challenge for Indonesia's economy to grow 5% this year due to the global trade war and softening consumer spending, but a moderation won't put the country's ratings at risk, Fitch's head of Asia-Pacific Sovereigns said on Wednesday.
The global ratings agency has trimmed its 2025 growth forecast for Southeast Asia's largest economy by 0.1 percentage point to 4.9%, and sees growth at 4.7% next year.
"It will be challenging to meet 5% growth this year as there's a lot of uncertainty globally on economic growth and on the tariffs," Thomas Rookmaaker told Reuters.
"So that means there are external headwinds while at the same time private consumption is also softening."
The government has set a 5.2% growth target for 2025, up from growth of 5.03% last year.
Indonesia is facing a 32% tariff on its exports to the U.S., unless a lower rate can be negotiated before a moratorium expires in July.
Rookmaaker said a weakening in state revenue could limit the government's ability to support growth, even as household spending has moderated to its slowest pace in five quarters.
Earlier this year, tax collections were disrupted after a system upgrade suffered glitches and outages. The Finance Ministry said collections have since improved, and as of March it had realised 15% of the full-year collections target.
Fitch rates Indonesia at 'BBB' with a stable outlook, and Rookmaaker said a moderation in growth this year would not change that.
"Growth is coming down a bit, but if it comes down not too drastically or for one year, it doesn't really move the needle from our perspective. It would move the needle if you have significantly lower growth," he said.
(Reporting by Stefanno Sulaiman; Editing by John Mair)
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