Protests, Sluggish Demand Dampen Indonesia’s Growth to 5%
By
Grace Sihombing and
Norman Harsono
November 5, 2025 at 11:09 AM GMT+7
Updated on
November 5, 2025 at 12:23 PM GMT+7
Prabowo called several ministers after Q3 data come out
Takeaways by Bloomberg AI
- Indonesia’s economy decelerated slightly in the third quarter due to social unrest and global trade uncertainty.
- Gross domestic product rose 5.04% in the July-September period from a year ago, with consumption growing 4.89% and private investment expanding by 5.04%.
- The country has indicated it’s confident that its growth momentum could pick up in the final quarter of 2025, with the new Finance Minister expecting a pace of 5.5%.
Indonesia’s economy decelerated slightly in the third quarter as social unrest and global trade uncertainty took a toll on domestic consumption and investment.
Gross domestic product rose 5.04% in the July-September period from a year ago, official data showed on Wednesday. That compares with the 5% median estimate of analysts surveyed by Bloomberg and the 5.12% growth pace recorded in the second quarter.
The rupiah held its earlier loss of 0.1% to 16,720 against the dollar after the data. The benchmark stock index was up 0.3%.
The moderation reflects weaker household spending after late August saw the worst
street protests in years, fueled by anger over youth unemployment and living costs. Consumption, which accounts for over half Indonesia’s GDP, grew 4.89% last quarter, its weakest print since late 2023.
Geopolitical tensions dampened private investment, which expanded by just 5.04% from 6.99% in the April-June period. Exports were a relatively bright spot for Indonesia. The sector still grew nearly 10% despite the onset of higher US tariffs in August, albeit at a slightly slower pace than the second quarter.
The latest data adds to evidence that Southeast Asian economies are proving resilient in the face of the global trade war, helped by a surge in services and electronics shipments. Vietnam is targeting over 8% GDP growth this year after factories went into overdrive to front-load goods to the US. Thailand raised its 2025 growth forecast to 2.4% from 2.2%, also due to the better-than-expected performance of its exports sector.
Manufacturing, agriculture and trade remained the biggest contributors to Indonesia’s economy, with education, business services and other services including tourism seeing the highest growth. On a non-seasonally adjusted basis, Indonesia’s third quarter GDP expanded 1.4% from the previous three months, in line with estimates.
Indonesia has indicated it’s confident that its growth momentum could
pick up in the final quarter of 2025, with new Finance Minister Purbaya Yudhi Sadewa expecting a pace of 5.5%. He has rolled out cash aid and livelihood programs, and injected $12 billion in cash to state-owned banks to boost lending.
Still, risks remain. Trade wars and uncertainty over the monetary policies of major economies persist, warranting continued efforts to protect domestic consumption and investment — the country’s main drivers of growth.
The central bank left its key interest rate unchanged in October as it assesses the impact of 125 basis points in cuts this year. Governor Perry Warjiyo has said he still sees
room to lower rates to support demand but the timing and magnitude would depend on rupiah stability and the effectiveness of policy transmission.
According to Capital Economics, its own tracker of economic activity shows that momentum is slowing down, citing sluggish vehicle sales and consumer confidence. “So long as inflation remains within target, as we expect, Bank Indonesia is likely to deliver a further 75 basis points of rate cuts to 4.00%, by early next year,” it said in a note.
PT Bank Danamon Indonesia economist Hosianna Evalita Situmorang was more optimistic, as the economy starts to feel the impact of stimulus measures, rate cuts and accelerated public spending.
“The base case is stronger, domestic-demand and capex-led growth in the fourth quarter of 2025, with momentum carrying into early 2026,” she said.
— With assistance from Miaojung Lin
