As we move into the second half of 2025, both global and domestic economies are showing signs of a slowdown. This presentation summarizes the performance of Gross Domestic Product (GDP), consumer confidence levels, and economic projections from major institutions. The aim is to provide a concise and informative overview for investors, market participants, and policymakers.
Recent GDP Performance
In the first quarter of 2025, real GDP contracted by 0.2%, a reversal from the 2.4% growth recorded in the previous quarter. This contraction reflects a shift in economic activity. However, nominal GDP still posted a modest quarterly increase of 0.85%, reaching US$29.98 trillion. On an annual basis, nominal GDP growth stood at 4.7%.
Key Drivers of Economic Contraction
Three main factors contributed to the GDP decline at the beginning of the year:
- Import Surge: Businesses increased imports ahead of new tariff implementations, worsening the trade balance.
- Decline in Government Spending: Reduced fiscal expenditures added pressure on domestic demand.
- Tariff Uncertainty: Ambiguity in trade policy direction negatively affected investment decisions and trade flows.
The combination of these factors created downward pressure on the pace of economic growth.
2025 Economic Projections
Financial institutions forecast GDP growth this year to range between 1.5% and 2.5%. The main challenges include ongoing trade policy uncertainty, diminishing fiscal stimulus, and weakening global demand.
In a Maxco YouTube livestream (June 24, 2025), Ade Yunus (Maxco RnD) stated that if trade policy remains under control and does not add further strain to production and consumption sectors, economic recovery may gain momentum in the second half of 2025. He also suggested that investor focus should shift to defensive and consumer-based sectors, as well as safe-haven assets in the event of renewed volatility due to geopolitical risks or additional tariffs.
Consumer Confidence Rebound
Despite the GDP slowdown, the Consumer Confidence Index (CCI) saw a significant rebound in May 2025, rising from 85.7 to 98.0 — the largest jump in the past four years. This renewed optimism was supported by:
- Improved Business Conditions
- Labor Market Stability
- Rising Income and Stock Market Expectations
Nonetheless, the expectations component of the index remains at 72.8, below the recession threshold, reflecting public caution about medium-term prospects.
Conclusion
While the year began with economic contraction, the surge in consumer confidence and signs of trade policy stabilization offer encouraging signals. If trade tensions can be effectively managed, economic recovery could strengthen in the second half of the year. For investors and policymakers, close attention to consumption indicators, trade trends, and investment flows will be crucial in navigating the economic landscape ahead.
source: https://www.youtube.com/watch?v=5DIGKzzdJEo
