Jakarta, 1 November 2025 — Prasasti Center for Policy Studies (Prasasti) projects Indonesia’s economy to grow steadily at around 5 percent in the third quarter (Q3) of 2025, roughly unchanged from the previous period. While consumption is beginning to show signs of improvement and investment remains solid, the overall data indicates that the current pace of growth is stabilizing rather than strengthening meaningfully. Next week, Statistics Indonesia (BPS) will release the official Q3 economic growth figures.
Prasasti notes a 5.8 percent year-on-year increase in retail sales in September — the fastest pace since early 2024 — signaling a modest improvement in household demand. However, core inflation of just 2.2 percent suggests the consumer spending rebound remains limited. Consumer confidence has also not fully recovered, constrained by uneven income growth and concerns over the rising cost of living.
“Consumption has improved, but the pace is far from strong,” said Gundy Cahyadi, Research Director at Prasasti. “What we are seeing now is stabilization, not a surge. The good news is that the underlying fundamentals remain solid.”
On the monetary front, liquidity conditions continue to improve. Broad money (M2) expanded 8 percent year-on-year in September, supported by Bank Indonesia’s monetary easing, which has reduced policy rates by 150 basis points since September 2024. The impact of this policy is becoming more visible, although transmission to credit and consumption is still progressing gradually.
On the fiscal side, government spending realization reached only 59.7 percent of the annual target as of September, compared to 64.7 percent in the same period last year. This indicates that fiscal support in Q3 remained limited, but it also provides room for an acceleration of spending toward year-end, when ministries and agencies typically expedite budget absorption.
Investment continues to serve as a key pillar of growth, though early signs of a slowdown have emerged. Capital goods imports — a proxy for project activity — grew 32.5 percent year-on-year in Q2 but decelerated to around 11.2 percent in July–August. Bank credit growth also softened to 7.6 percent. Even so, data from the Indonesian Investment Coordinating Board (BKPM) shows that realized investment rose 13.9 percent year-on-year in Q3, led by data centers, logistics, and digital infrastructure.
“Investment remains the anchor of growth, but its momentum is easing,” Gundy noted. “Investment inflows into services and digital sectors are encouraging, but the next stage must focus on revitalizing the industrial sector to maintain long-term competitiveness.”
Externally, the trade balance continues to provide an important buffer for economic stability. The trade surplus reached USD 5.49 billion in August, the highest since early 2024. Export performance remains supported by steady demand from major markets and relatively strong commodity prices, particularly crude palm oil (CPO). This sustained surplus has helped stabilize the rupiah and strengthen foreign exchange reserves, bolstering Indonesia’s macroeconomic resilience.
“The combination of monetary and fiscal policies remains well-aligned. Bank Indonesia’s monetary easing supports liquidity without triggering capital flow volatility, while disciplined fiscal management creates space for more targeted stimulus. This synergy underpins stable and sustainable growth,” Gundy added.
Prasasti assesses that Indonesia’s economy is on a stable and measured trajectory — neither overheating nor weakening excessively. Upside potential depends on faster fiscal disbursement and sustained investment in the fourth quarter, while key risks stem from cautious household sentiment and the still-gradual recovery in credit growth.
“For now, a growth rate of around 5 percent remains resilient and reflects the strength of Indonesia’s economic fundamentals amid continuing global uncertainty,” he said.