Indonesia's Economy Quarter III-2025 Is Predicted To Grow 5 Percent

JAKARTA - The Center for Policy Studies (Prassia) projects that the Indonesian economy will grow stable in the range of 5 percent in the third quarter of 2025 or relatively unchanged compared to the previous period.

For information, the Central Statistics Agency (BPS) is scheduled to release data on Gross Domestic Product (GDP) in the third quarter of 2025 on Wednesday, November 5, based on its official calendar.

"For now, the growth rate of around 5 percent is considered to remain strong and reflects Indonesia's fundamental resilience in the midst of uncertain global dynamics," said Research Director Prasasti Gundy Cahyadi quoting Antara.

The inscription assesses that consumption is starting to show signs of improvement and solid investment. All data indicates that the current growth rate is more stable than significantly strengthened.

Inscription sees an increase in retail sales data by 5.8 percent on an annual basis in September. That, according to him, is the highest rate since early 2024 and shows a slight increase in household demand.

However, core inflation which only reached 2.2 percent shows that people's spending impetus is still limited. Consumer confidence has not fully recovered, is under pressure from uneven revenue growth and concerns about living expenses.

"Consumption is indeed improving, but the pace is still far from strong. What we are seeing right now is stabilization, not a spike. The good news is that the basic foundation remains solid," said Gundy.

From the monetary side, liquidity conditions show improvement. The amount of money in circulation in a broad sense (M2) grew 8 percent on an annual basis in September, driven by the easing of Bank Indonesia's monetary policy (BI) which has cut the benchmark interest rate by 150 bps (points base) since September 2024.

According to Prasasti, the impact of this policy is starting to be felt, although the distribution to the credit and consumption sector is still ongoing in stages.

Meanwhile, from the fiscal side, the realization of government spending until September only reached 59.7 percent of the annual target, compared to 64.7 percent in the same period last year.

These conditions show that fiscal boosts in the third quarter are still limited, but open space for accelerated spending at the end of the year when ministries and institutions usually accelerate budget absorption.

Investment remains the main support for growth, although it begins to show signs of slowdown. Capital goods imports, which are indicators of project activity, grew 32.5 percent (year-on-year/yoy) in the second quarter, but slowed to about 11.2 percent in July-August.

Bank credit growth also weakened to 7.6 percent. However, data from the Investment Coordinating Board (BKPM) noted that investment realization rose 13.9 percent on an annual basis in the third quarter, led by the digital data center, logistics and infrastructure sectors.

"Investment is still an anchor of growth, but the momentum is starting to decline. The flow of investment into the service and digital sectors is indeed positive, but the next stage needs to be focused on revitalizing the industrial sector so that long-term competitiveness is maintained," said Gundy.

Meanwhile, from the external side, the trade balance continues to be an important cushion for economic stability. The trade surplus reached $5.49 billion in August, the highest since early 2024.

Export performance is still supported by stable demand from the main market and relatively strong commodity prices, especially crude palm oil (CPO).

The sustainable surplus helped maintain the stability of the rupiah exchange rate and strengthen foreign exchange reserves, thus supporting Indonesia's macroeconomic resilience.

The combination of monetary and fiscal policies is well maintained. BI's monetary easing maintains liquidity without causing fluctuations in capital flows, while disciplined fiscal management provides space for more directed stimulus. This synergy supports stable and sustainable growth, "said Gundy.