Explore 4 key economic & political phenomena with experts at the DBS Asian Insights Conference 2025 | Bahasa

Indonesia, 23 May 2025 - In facing increasingly complex global dynamics, understanding the direction of economic and political changes has become key for business players, policymakers, and the general public. DBS Asian Insights Conference 2025, themed ‘Growth in a Changing World,’ features renowned experts such as Chief Economist of DBS Group Research Taimur Baig and Executive Director of Indikator Politik Indonesia Burhanuddin Muhtadi to thoroughly explore four major phenomena currently shaping today’s global landscape.

The world is no longer US-centric

Data from the World Trade Organization (WTO) shows that US trade contributes about 11 percent to global trade. Additionally, when looking at sovereign debt, US debt accounts for 65 percent compared to 35 percent from other countries. This reflects an increasingly multipolar world that is no longer solely US-centric, marked by the fact that most of the global population, Gross Domestic Product (GDP), and trade now lie outside the United States.

For example, China’s economic growth now ranks first based on Purchasing Power Parity (PPP) according to the International Monetary Fund (IMF), along with the strengthening of the BRICS alliance. Therefore, the right response, such as strategic diversification, becomes key to maximizing growth potential, allowing Indonesia to continue growing with or without the United States.

Although weakening, Indonesia holds competitive strength in the global market

Indonesia’s economic growth slowed in the first quarter of 2025, reaching 4.87 percent year-on-year (yoy), compared to 5.11 percent during the same period in 2024. Even so, data from Statistics Indonesia (BPS) shows that Indonesia still ranks eighth among the world’s top 10 fastest-growing countries.

Looking ahead, one source of uncertainty that remains is the tariff policy from the United States under the Trump 2.0 administration. Responding to this, DBS Group Research Chief Economist Taimur Baig said, “Indonesia remains in a relatively resilient position thanks to its limited trade exposure to the United States compared to other countries. To navigate these tariff dynamics, it is crucial to build reconciliation and align responses with neighboring countries.”

Additionally, Executive Director of Indikator Politik Indonesia Burhanuddin Muhtadi highlighted another key point: public trust in the government. “The first issue is the free nutritious meals (MBG) program, which is still being implemented in a highly centralized manner. The second is Danantara. The government needs to assure the public that this program is on the right path, especially in the midst of global economic slowdown concerns,” he added.

The anxiety of Indonesian middle class requires government attention

“In the past four to five years, the number of middle-class individuals has significantly declined. This is worrying because 71 percent of Indonesia’s economic growth comes from the middle class. If this trend continues, it will affect the economy and influence Indonesia’s political direction,” said Burhanuddin Muhtadi.

Several studies show a pattern of dissatisfaction with the government, especially among those with higher education levels. This is reflected in the emergence of movements such as #IndonesiaGelap and #KaburAjaDulu. Hence, strategic policies are necessary not only for the lower middle class but also for the middle class as a whole.

Economically, the government needs to manage foreign exchange movements, strengthen collaboration with other ASEAN countries, and explore new markets. Taimur Baig believes these tactics can support Indonesia’s economy, including the middle class.

The importance of stability and a pragmatic approach to facing the situation

Amid increasingly dynamic global tensions, the government needs to introduce various breakthroughs to boost local economic enthusiasm. One way to achieve this is through budget efficiency relaxation to motivate business players. Besides the central government, regional governments also need to utilize their budgets effectively.

Politically, Indonesia’s joining of the BRICS alliance is a positive first step. However, this must be approached carefully to ensure Indonesia is not perceived as aligning with any particular political bloc.

DBS Asian Insights Conference is Bank DBS Indonesia’s annual conference that brings together leaders and global thinkers to discuss the opportunities and challenges of change in Indonesia. This conference aims to turn concerns and doubts into action and strategic decisions regarding the future direction of business.

Information about the DBS Asian Insights Conference 2025 can be found on Instagram: @dbsbankid, and replays are available on the Bank DBS Indonesia YouTube channel.

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