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Indonesia Q3 GDP: Growth Slows Slightly, But Economic Momentum Remains Intact

Indonesia's economic growth in the third quarter of 2025 stood at 5.04% YoY, slightly below 5.12% in the previous quarter and in line with market expectations (consensus 5.0%).
This slowdown reflects pressure from weakening household consumption, global uncertainty, and the impact of social unrest in August.

On a quarterly basis, GDP grew 1.4% QoQ, while the rupiah weakened slightly to Rp16,720/USD, and the IHSG gained 0.3% following the release — indicating a relatively stable market response.

Consumption Weakens: Impact of Domestic Sentiment
Household spending, which accounts for more than half the economy, grew 4.89% YoY, marking the weakest growth since late 2023.
Mass protests over youth unemployment and cost of living pressures in August weighed on sentiment and consumption activity.

However, certain service categories such as education, business services, and tourism showed strong recovery trends, consistent with normalised mobility and post-pandemic demand.

Investment Declines, Exports Remain Supportive
Private investment slowed to 5.04% YoY from 6.99% in the second quarter.
Companies remain cautious about geopolitical risks and global demand uncertainty.

On the other hand, exports grew approximately 10% YoY, supported by commodities and electronics — though slightly lower than the previous quarter.
Some regional countries such as Vietnam and Thailand also showed solid export performance, signalling that Southeast Asia continues to benefit from robust external demand.

Policy & Outlook: Government Confident Recovery Will Strengthen in Q4
Finance Minister Purbaya Yudhi Sadewa expects growth to improve to around 5.5% in the fourth quarter, supported by:
- Cash assistance programmes and livelihood stimulus,
- USD 12 billion capital injection into state-owned banks to accelerate credit,
- Infrastructure realisation, which typically increases towards year-end.

On the monetary side, BI held interest rates after 125 bps of cuts throughout the year.
BI signalled that room for additional easing remains open, but is heavily dependent on rupiah stability and credit transmission effectiveness.

Risks to Watch
Several external and domestic factors could still constrain growth:
- Prolonged global trade tensions and tightening global liquidity,
- Rupiah volatility limiting room for monetary easing,
- Social stability and labour market conditions affecting consumption recovery.

However, overall, Indonesia's economic fundamentals remain sound — low inflation, solid external sector, and relatively stable fiscal discipline.

Growth slowing to 5.04% reflects near-term pressure, not structural decline.
With exports remaining strong, increased fiscal support, and cautious monetary policy, a recovery towards >5.5% in Q4 remains realistic.

Amid global uncertainty, Indonesia remains one of the most stable emerging markets in Asia heading into 2026.