Statistics Indonesia (BPS) recorded Indonesia’s economic growth in the second quarter of 2025 at 5.12% year-on-year, rising from 5.05% in the same period last year. This figure reflects a continued national economic recovery despite various domestic and global pressures. 

This growth was driven by positive performance across nearly all business sectors and most expenditure components. On the production side, the highest growth was recorded in the "Other Services" sector, which grew by 11.31%. Following closely were Business Services at 9.31%, Transportation and Warehousing at 8.52%, and Accommodation and Food & Beverage Services at 8.04%. 

On the expenditure side, the highest growth was seen in Exports of Goods and Services, which rose by 10.67%. Other components that supported growth included Consumption by Non-Profit Institutions Serving Households (NPISHs) at 7.82%, Gross Fixed Capital Formation (GFCF) at 6.99%, and Household Consumption at 4.97%. 

Only Government Consumption (PK-P) experienced a contraction, declining by 0.33%. On the other hand, Imports of Goods and Services—classified as a deductive component in GDP—also grew significantly, by 11.65%. 

However, compared to the previous quarter, the pace of growth slowed. Gross domestic product (GDP) at current prices reached IDR 5,947 trillion, while at constant prices it stood at IDR 3,396.3 trillion. 

"Economic growth compared to Q1 2025, or on a quarterly basis, was 4.04%," said BPS Deputy for National Accounts and Statistical Analysis, Moh Edy Mahmud, during a press conference on Tuesday, August 5. 

This figure is lower than the 4.87% quarterly growth recorded in Q1. 

Weak Purchasing Power and Global Risks Pose Challenges 

Despite the higher year-on-year growth, several economists believe that Indonesia’s economy remains overshadowed by structural and external challenges. 

“Our economy is still facing pressure from declining purchasing power and the worsening risks of global trade disruptions,” said Teuku Riefky, a Macroeconomics and Financial Market Researcher at LPEM FEB UI. 

He projected Indonesia’s economic growth in Q2 2025 would only reach 4.8% year-on-year. For the full year, the economy is expected to grow by just 4.75%. 

Similarly, the Center of Reform on Economics (CORE) Indonesia also forecasted a slowing trend. Economic growth in Q2 is estimated to decelerate to around 4.7%–4.8%, down from the previous quarter’s 4.87%. 

For the entirety of 2025, CORE projects Indonesia’s economic growth to be in the range of 4.6%–4.8%, well below the government’s target of above 5%.  

This article is published in partnership with Katadata 

Original article here