November 1, 2025 | 11:50 am
TEMPO.CO, Jakarta - The Prasasti Center for Policy Studies predicts that Indonesia's economy will grow around 5 percent in the third quarter of 2025, down from the previous quarter. In the second quarter of this year, Statistics Indonesia (BPS) reported an economic growth rate of 5.12 percent. Data on third-quarter economic growth will be announced in early November.
The Research Director of Prasasti, Gundy Cahyadi, stated that although consumption shows signs of improvement and investment remains solid, the overall data indicate that the current growth rate is stable rather than significantly strengthening. Gundy said, "Consumption has improved, but the growth is still far from strong," in a press release on Saturday, November 1, 2025.
Prasasti observed a 5.8 percent annual increase in retail sales in September. This is the highest growth rate since early 2024 and indicates a slight increase in household demand. However, Gundy stated that the fact that core inflation only reached 2.2 percent indicates that pressure on consumer spending is still limited.
He concluded that consumer confidence has not fully recovered due to suppressed income growth and concerns about the cost of living.
From a monetary standpoint, Prasasti observes an improvement in liquidity conditions. The broad money supply (M2) increased by eight percent annually in September. This increase was driven by Bank Indonesia's monetary policy easing, which included cutting the benchmark interest rate by 150 basis points since September 2024.
Meanwhile, government spending only reached 59.7 percent of the annual target by September. This position is lower compared to the same period last year, which reached 64.7 percent. According to Gundy, this condition indicates that fiscal stimulus in the third quarter remains limited. However, there is still room for increased spending at the end of the year.
"Investment is still the anchor of growth, but its momentum is starting to decline," said Gundy. Capital goods imports grew by 32.5 percent year on year in the second quarter, but slowed to around 11.2 percent in July-August. Nevertheless, data from the Investment Coordinating Board (BKPM) recorded a 13.9 percent annual increase in investment realization in the third quarter, led by the data center, logistics, and digital infrastructure sectors.
Finance Minister Purbaya Yudhi Sadewa predicts that economic growth in the third quarter will be slightly lower than in the previous quarter. However, there is still room for increased spending at the end of the year. However, the finance minister is optimistic that the economy will grow by more than 5 percent in the third quarter.
"(Third quarter prediction) is slightly above 5. Maybe slightly lower, because there is some commotion," said Purbaya after meeting with the BPS officials at the Ministry of Finance office in Jakarta on October 28, 2025. Nevertheless, he believes that the Indonesian economy will bounce back and grow rapidly by 5.5 percent in the fourth quarter of 2025.
Ilona Estherina contributed to the writing of this article
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