Indonesia’s economy demonstrated strong resilience and competitiveness amid global uncertainty. According to the Central Statistics Agency (BPS), the country’s Gross Domestic Product (GDP) grew by 5.04% year-on-year in the third quarter of 2025, keeping the nation on track to meet its annual growth target of 5.2%.

“GDP growth of 5.04% (yoy) in Q3 2025 shows the strength of the national economy, driven by solid household consumption, rising investment, and well-coordinated fiscal and monetary policies,” said Coordinating Minister for Economic Affairs Airlangga Hartarto on Wednesday, 5 November 2025, in Jakarta.

Household Consumption and Investment Drive Economic Expansion

Household consumption remained the main engine of growth, rising 4.89% (yoy), supported by government stimulus and higher mobility of the public. Investment also increased significantly, with total Foreign and Domestic Direct Investment (PMI and PMDN) reaching IDR 1,434.3 trillion, up 13.7% year-on-year.

The Manufacturing Purchasing Managers’ Index (PMI) in October 2025 stayed in expansion territory at 51.2, indicating potential acceleration in the next quarter.

Indonesia Outperforms ASEAN and G20 Economies

Optimism for Indonesia’s economy is reflected in the IMF’s upgraded growth projections for 2025 and 2026. The IMF highlighted Indonesia as a “bright spot” amid the global economic slowdown. Indonesia’s Q3 performance exceeded many ASEAN and G20 countries, including Saudi Arabia (5.0% yoy), China (4.8% yoy), Singapore (2.9% yoy), and South Korea (1.7% yoy).

Regional and Sectoral Contributions to GDP

By sector, the highest growth was recorded in education services, driven by the new school year and increased spending, and business services, boosted by rental and labor activities. Major GDP contributors remained manufacturing (19.15%), trade (14.25%), and agriculture (13.19%).

Regionally, economic growth was broad-based: Java grew 5.17%, contributing 56.68% to national GDP, followed by Sulawesi (5.84%), Sumatra (4.90%), Kalimantan (4.70%), and Maluku-Papua (2.64%), supported by natural resource processing activities.

Government Policies Support Inclusive Growth and Industrial Development

Price stability remained on track with inflation at 2.86% (yoy) in October 2025, within the target range of 2.5±1%. External conditions were solid, with foreign reserves at USD 148.7 billion and debt ratios at safe levels.

The government continues countercyclical policies to support growth through accelerated state spending, strengthening social protection for over 35 million families, and providing consumption and transportation stimulus ahead of Christmas and the New Year.

In investment and industrial development, the government advanced industrial downstreaming with projects such as the USD 4 billion Integrated Petrochemical Plant by PT Lotte Chemical Indonesia in Cilegon, scheduled for inauguration on 6 November 2025.

PHOTO: KEMENKO PEREKONOMIAN

This article was created with AI assistance.