A powerful ending to 2025

INDONESIA - Report 09 Dec 2025 by Cyrillus Harinowo

As the year 2025 comes to a close, the Indonesian economy continues robust. For the last three quarters the Indonesian economy has grown by slightly over 5%, and the last quarter of this year is also expected to post decent growth. For example, the S&P Global Indonesian Manufacturing PMI rose to 53.3 in November 2025 from 51.2 in October. Thus the expansion mode of the previous month continued and in fact accelerated in November, indicating optimism in the Indonesian economy. The Director General of Economic and Fiscal Strategy of the Ministry of Finance predicted that the Indonesian economy may grow by about 5.4% in the last quarter of 2025, which would lead overall economic growth for the year to approximately 5.2%. My own prediction is that economic growth may not be far from that prediction—at least it will be over 5% for full-year 2025.

In the meantime, the balance of payments data from the Indonesian Central bank for Q3 2025 indicated a large surplus of the current account, to the tune of $4,047 million or 1.09% of GDP. However, the large deficit in the financial account of around $8,141 million, and also in the errors and omissions account of $2,358 million led to a large deficit of the overall balance of payments of $6,384 million. Foreign exchange reserves of the Central Bank fell to $148,737 million in September 2025.

Regarding the trade balance for October 2025, exports fell by 1.79% M/M in October, reaching $24,236.3 million, while imports rose 7.42% to $21,843.1 million. That led to a trade surplus of $2,393.2 million. This surplus is quite large, but is still way below the surplus for September 2025, which reached $4,343.8 million. The rise in imports was mostly in the form of raw materials, indicating an increase in production for Christmas and the New Year 2026.

Meanwhile, inflation in November 2025 reached 0.17%, leading to a Y/Y rate of 2.72%, a level in the upper half of the target inflation corridor of the Central Bank. Given that background, as well as the latest developments in the rupiah exchange rate, Bank Indonesia decided to keep the benchmark rate at 4.75% at its meeting of November 18-19, 2025.

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