The Suspension Of Economic Growth In The Third Quarter Of 2025 Is Considered Seasonal

JAKARTA - The Central Statistics Agency (BPS) revealed that economic growth in the third quarter of 2025 reached 5.04 percent year on year (yoy) when compared to the same quarter in the previous year of 4.95 percent.

Indonesia's economy in the second quarter of 2025 reached 5.12 percent (yoy) or quarterly (quarter to quarter/qtq) grew 1.43 percent.

Head of Macroeconomics & Market Research of Permata Bank, Faisal Rachman said the slowdown in growth in the third quarter of 2025 was in line with previous estimates, but slightly above the market consensus projected a growth of 5.00 percent.

"This slowdown reflects seasonal normalization after the period of religious celebrations in the previous quarter which usually boosted household consumption," he said in his statement, Wednesday, November 5.

He added, cumulatively, economic growth during the first nine months of 2025 reached around 5.01 percent (yoy), an increase from growth below 5 percent in the first half of the year.

In terms of expenditure, economic growth in the third quarter of 2025 was driven by a significant surge in government spending and strengthening net export performance.

Meanwhile, government spending grew 5.49 percent (yoy) after previously contracting 0.33 percent in the second quarter of 2025, this increase was supported by a pro-growth fiscal policy.

"Neto exports are also improving because the slowdown in imports is greater than the slowdown in exports," he said.

He added that import growth slowed sharply from 11.48 percent to 1.18 percent (yoy), reflecting a decline in investment from 6.99 percent (yoy) to 5.04 percent (yoy), as well as a decrease in service imports and the end of the school holiday season as well as the Hajj period.

Meanwhile, exports only slowed slightly from 10.95 percent to 9.91 percent (yoy), supported by strong demand for CPO, iron and steel, electric engines, and increased tourist visits during the holiday season.

"This slowdown was largely due to normalization of demand after increasing demand from the US ahead of the implementation of the reciprocal rate in August 2025," he said.

Faisal added that household consumption is the largest component of GDP by growing by 4.89 percent (yoy), or slowing down compared to 4.97 percent (yoy) in the previous quarter, due to normalization after seasonal increase in spending during the period of religious celebrations in the second quarter of 2025.

Faisal said that from a sectoral perspective, the manufacturing industry became the main contributor to economic growth in the third quarter of 2025.

According to him, the manufacturing sector was driven by an increase in the PMI index which returned to the expansion zone (above 50), while trade received encouragement from the rise of e-commerce activity.

"The increase in manufacturing PMIs is returning to the expansion zone (indeks > 50), the trade sector which is driven by increased e-commerce activity, the information and communication sector which is growing along with increasing online economic activity, as well as the agricultural sector which is supported by increasing demand for CPOs," he said.