November 25, 2025 | 06:02 pm
TEMPO.CO, Jakarta - Bank Indonesia (BI) reported a slowing in the growth of broad money (M2) in October 2025, following a peak growth rate achieved in September. Economists suggest this development was influenced by capital outflows in the government bond market and the absence of specific liquidity-driving events.
BI's report, published on November 22, 2025, noted that the total M2 in October 2025 amounted to Rp9,783.1 trillion, growing by 7.7 percent annually (year-on-year/yoy). This marks a decrease from the 8 percent growth recorded the previous month.
Maybank economist Myrdal Gunarto attributed the deceleration to two primary factors. "During October, there was a significant capital outflow in the government bond market, with many foreign investors exiting the market," he said on Tuesday, November 25, 2025. This outflow affected the circulation of money in the financial system.
The economist noted the absence of large, specific liquidity injections in October. This contrasts with September, when Finance Minister Purbaya Yudhi Sadewa injected Rp200 trillion into the members of the State-Owned Bank Association (Himbara). "There was no such allocation in October," Myrdal confirmed.
Furthermore, Myrdal mentioned that economic activities were progressing only gradually. The Ministry of Finance reported that state expenditure realization by the end of October 2025 was still only 73.5 percent of the target outlook. From the credit perspective, both market players and banks remained relatively selective, particularly regarding credit for micro, small, and medium enterprises (MSMEs) or non-investment credit.
Conversely, Chief Economist of Permata Bank, Josua Pardede, argued that the slowing M2 growth should not be interpreted as a sign of a serious economic downturn. He noted that, in terms of trend, the M2 level was still significantly higher compared to the beginning of the year, when growth stood around 5.5 percent.
"So, cumulatively, the liquidity in the economy is clearly looser compared to the beginning of 2025," he told Tempo on Tuesday, November 25, 2025.
Josua stated that current domestic demand indicators actually show improvement. Bank Indonesia's Consumer Survey recorded a sharp increase in the Consumer Confidence Index from 115.0 in September to 121.2 in October. Both the current economic condition index and the consumer expectation index also strengthened.
He explained that the slowing M2 growth reflected an adjustment in the pace of liquidity growth, not serious economic weakening. Although credit slowed compared to September, Third-Party Funds continued to grow, driven by government financial expansion and BI's liquidity relaxation, which increased the ratio of liquid instruments to Third-Party Funds.
The fact that the credit ceiling had not yet been drawn by debtors remained significantly large, indicating that limitations were rooted in demand-side issues and the readiness of the business sector, not a lack of liquidity.
"With this picture, the slowing of M2 growth should be more accurately interpreted as an adjustment in the pace of liquidity growth after it had strengthened quite rapidly, rather than a sharp signal of economic activity weakening," Pardede concluded.
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