• Indonesia’s economy expanded 5.12% year-on-year in 2Q25, accelerating from 4.87% in 1Q25 and marking the fastest pace since 2Q23. This growth notably outperformed SSI’s forecast of 4.93% and the market consensus of 4.8%, signaling stronger-than-expected resilience amid global headwinds and new tariff pressures from the U.S.
• ⁠⁠From the expenditure side, the key driver was a significant rebound in gross fixed capital formation (PMTB), which rose 6.99% YoY, sharply higher than 2.12% in Q1. This indicates improving investor confidence and acceleration in infrastructure and machinery investment. Household consumption remained robust at 4.97% YoY, sustaining its role as the backbone of growth at over 54% of GDP. Exports of goods and services surged 10.67% YoY, reflecting front-loading of shipments ahead of the U.S. tariff implementation in August, while imports jumped 11.65% YoY, in line with stronger investment and production demand. Government spending contracted slightly by 0.33% YoY, but this was a milder drop compared to Q1 (-1.37%), softening its drag on growth.
• ⁠⁠From the production side, manufacturing (Industri Pengolahan) was a major contributor, growing 5.68% YoY and underscoring the recovery in industrial output following a period of soft demand. Other high performers included transportation and warehousing (8.52% YoY), hospitality (8.04% YoY), and business services (9.31% YoY), reflecting both domestic demand and export-oriented activities. Regionally, Java remains the main growth engine, contributing 56.94% to national GDP with 5.24% YoY growth, followed by Sulawesi at 5.83% YoY as a rising production hub.
• The stronger-than-expected Q2 result highlights Indonesia’s resilience despite external challenges, particularly the new 19% U.S. tariff on Indonesian goods, which replaced the initially threatened 32% rate. The surge in PMTB and manufacturing above 5% is a particularly encouraging signal for medium-term growth, as it suggests that domestic investment momentum is starting to align with the government’s ambition to lift potential growth toward 5.1% this year. Looking ahead, Q3 growth may moderate due to the immediate impact of the U.S. tariff implementation in August and potential cooling in export shipments after the pre-tariff rush. However, continued infrastructure spending, resilient household consumption, and a firming manufacturing base should cushion the downside. Bank Indonesia’s accommodative stance and stable inflation also provide continued supportive macro backdrop.