Economist: 5.04 Percent Economic Growth In The Third Quarter Of 2025 Is Not A Fundamental Weakening

JAKARTA - Head of Permata Bank Economist Josua Pardede views Indonesia's economic growth in the third quarter of 2025 as 5.04 percent (year-on-year/yoy) not showing fundamental weakness but being driven by seasonal factors.

He said the slowdown was seasonal after a spike in consumption during the religious holiday period in the previous quarter. To note, economic growth in the second quarter of 2025 reached 5.12 percent (yoy).

"This weakening reflects seasonal normalization after the religious holiday period in the previous quarter, which usually supports stronger household consumption," Josua said in a statement in Jakarta, quoted by Antara, Thursday, November 6.

He noted that the economic growth rate in the third quarter of 2025 was in accordance with market expectations. Permata Bank through the Permata Institute for Economic Research (PIER) previously also estimated this figure.

In terms of expenditure, according to Josua, economic growth is mainly due to significant rebound factors in government spending and strengthening the performance of export net.

After experiencing a contraction of -0.33 percent (yoy) in the second quarter, government spending jumped to 5.49 percent (yoy) thanks to the government's pro-growth steps.

In addition, export net also improved due to a sharper slowdown in imports than exports.

Imports only grew 1.18 percent (yoy), much lower than 11.48 percent (yoy) in the previous quarter, reflecting a decline in investment activity and normalization of post-school holiday service imports.

Meanwhile, exports grew steadily at 9.91 percent (yoy), driven by strong demand for CPO, iron-silver, and electric engines.

As for household consumption, which contributed the largest to GDP, grew 4.89 percent (yoy), slightly slower than 4.97 percent (yoy) in the previous quarter.

"This is natural because of the post-religious celebration effects," said Josua.

From a sectoral perspective, the main contributor to economic growth in the third quarter, namely the manufacturing industry, which is supported by improvements to Indonesia's manufacturing PMI by more than 50 or back to the expansion zone.

In addition, the trade and information-communication sectors are showing an increase, in line with the surge in digital activity. The agricultural sector is also strengthened, supported by high domestic demand.

"The performance of these sectors shows the resilience of Indonesia's economic structure to global pressure," said Josua.

He also estimates that Indonesia's economic growth in 2025 will be in the range of 5.0-5.1 percent (yoy), slightly higher than last year's realization of 5.03 percent (yoy).

According to him, household consumption will improve in line with the improvement of the labor market and controlled inflation, while investment will be driven by the potential decline in global and domestic interest rates that strengthen investor confidence.