Indonesia's economy grows faster than expected
Indonesia's economy expanded by 5.12% year-on-year in Q2/2025, up from 4.87% in the previous quarter, exceeding the forecasts of many economic organizations, which had previously projected a rate of less than 5%, according to Statistics Indonesia (BPS).
A traditional market on Lombok Island, Indonesia, where local produce is sold. Photo courtesy of VNA.
Data from BPS showed that household consumption continued to be the main driver, contributing 2.64 percentage points to GDP growth.
Gross fixed capital formation (GFCF), an indicator reflecting investment, contributed 2.06 percentage points. Meanwhile, government consumption contributed 0.22 percentage points to overall economic growth.
The growth exceeding 5% is a positive surprise, considering that public consumption has not yet recovered and investment is still awaiting clear policy direction, said Saleh Husin, vice chairman of the Indonesian Chamber of Commerce and Industry. He also stated that pressure from the global export market continues to be a challenge.
However, with support from public spending and the business sector, the Indonesian economy could maintain strong growth momentum in the second half of 2025, especially if it can create more formal jobs to boost income and social welfare.
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