Indonesia’s second-quarter growth unexpectedly accelerated its fastest pace in two years, with exports and investment helping the economy beset by weak lending growth and large-scale job losses in manufacturing.
The U.S. Bureau of Statistics announced Tuesday that its GDP rose by 5.12% over the same period last year in the three months ended a year ago. This expectation dropped to a 4.8% increase, according to median estimates in the Bloomberg survey. The rupee has barely changed to $16,384, while the stock has increased to 1% after the data.
The economist was surprised. Outside of the pandemic, the difference between forecast and actual data is the biggest since the first quarter of 2014, according to data compiled by Bloomberg. While the economy may benefit from lowering interest rates, government stimulus and the Eid holiday, analysts have diverged on the outlook.
“I doubt whether investment growth in the second half of the year will be in Jakarta’s chief economist Ahmad Mikail Zaini said the reason was reduced loan growth and the contraction in foreign direct investment in June.
In contrast, Indonesian Bank economist Hosianna Everita Situmorang said the third-quarter figures “can continue this improvement” thanks to government stimulus. Spend free school meals and other projects; support monetary policy; and flexible agricultural output.
BPS said fixed fixed capital formation rose 6.99% in the second quarter, the fastest pace in four years due to infrastructure development and machinery spending.
Nevertheless, there are questions about the reliability of statistics.
“We don’t have much confidence in the data,” Capital Economics said in a report after the announcement. “We have long been concerned about the reliability of Indonesia’s GDP data. Indonesia lasted for nearly six years before the pandemic, with official GDP growth from 5% y/y. In recent years, GDP growth has begun to hover around the same speed range again.”
Private consumption, which accounts for more than half of the country’s GDP, grew 4.97%.
“This remains below the 5.0% trend in the decade before the Common-19 pandemic, which shows consumers remain cautious,” Tamara Mast Henderson wrote in a Bloomberg Economics report.
Indeed, there is A large number of numbers 280 million people have been abandoned as Chinese exporters lose jobs in textiles and other industries. The tough tariff imposition of the United States may increase pressure on Beijing to find new markets.
Southeast Asia’s largest economy grew 4.04% quarterly, surpassing economists’ expansion forecast of 3.69%. Exports grew 10.67%, helping to cause goods in the pre-cargo ahead of the looming U.S. tariffs, down from 32% threat in Indonesia to 19%.
Nevertheless, external risks remain due to worsening trade wars and slower global economy, which could undermine domestic demand and trade momentum. On August 7, higher tariffs on exports to the United States will come into effect on August 7.
Government spending fell 0.33% in the second quarter compared with the same period last year.
Prabowo will launch the government’s spending plan for 2026 and its economic growth target for the year in its first budget speech on August 15. The government has lowered the 2025 GDP growth outlook to 4.7%-5% from its initial 5.2% forecast and said it is preparing more fiscal incentives to increase purchasing power by the end of the year.
More monetary support may also be provided. Since September, Indonesian banks have lowered their key interest rates by 100 basis points and ensure Further reductions continued to support economic growth and boost bank loans, which fell to a two-year low in June.
“In Indonesia’s second-quarter growth (by investment and export), the expected prints are unlikely to last longer than expected,” Bloomberg’s Henderson wrote. “The impact of higher U.S. tariffs have not yet fallen. When it’s case, growth will suffer.”
