Indonesia’s GDP growth moderated to 1.43% QoQ in Q3 2025, a marked slowdown from the 4.04% jump in Q2 but still above consensus. This deceleration reflects a normalization after a strong rebound earlier in the year, following a contraction of -0.98% in Q2 2025 and a modest 0.53% in Q1. The quarterly pattern underscores Indonesia’s cyclical sensitivity to both domestic demand and external trade dynamics.

Drivers this month

• Domestic consumption remained resilient, contributing approximately 0.70 percentage points (pp) to growth.
• Investment growth slowed, subtracting 0.30 pp amid cautious corporate spending.
• Net exports added 0.20 pp, supported by stronger commodity prices and export volumes.

Policy pulse

The 1.43% growth rate sits below the 12-month average of 1.86% QoQ but above the 2025 Q1 trough. Bank Indonesia’s inflation target of 3% ±1% remains achievable, with growth moderation easing overheating risks. The central bank is likely to maintain a neutral monetary stance, balancing growth support with inflation control.

Market lens

Immediate reaction: The Indonesian rupiah (IDR) strengthened 0.30% against the USD within the first hour post-release, reflecting confidence in the growth resilience. Sovereign bond yields edged down by 5 basis points, signaling reduced risk premia.

Indonesia’s GDP growth is a key barometer of Southeast Asia’s largest economy. The 1.43% QoQ increase in Q3 2025 contrasts with the sharp 4.04% expansion in Q2 and the contraction of -0.98% in Q2 2025, highlighting volatility amid global headwinds and domestic adjustments.

Monetary Policy & Financial Conditions

Bank Indonesia has held its benchmark 7-day reverse repo rate steady at 5.25% since mid-2025. Inflation pressures have eased slightly to 3.20% YoY, supporting a neutral policy stance. Financial conditions remain accommodative, with credit growth at 9.50% YoY, slightly below the 12-month average of 10.30%.

Fiscal Policy & Government Budget

The government’s fiscal deficit narrowed to 2.50% of GDP in Q3, down from 3.10% in Q2, reflecting improved tax collections and restrained spending. Infrastructure investment remains a priority, but fiscal prudence is evident amid global uncertainty.

External Shocks & Geopolitical Risks

Indonesia faces moderate risks from slowing Chinese demand and commodity price volatility. Geopolitical tensions in the Indo-Pacific region have so far had limited direct impact but warrant monitoring. Export growth of 5.60% YoY in Q3 was supported by palm oil and coal prices.

Drivers this month

• Private consumption contributed 0.70 pp, supported by rising wages and stable inflation.
• Investment slowed, subtracting -0.30 pp amid cautious business sentiment.
• Government spending added 0.20 pp, reflecting ongoing infrastructure projects.
• Net exports contributed 0.20 pp, buoyed by commodity exports.

Policy pulse

Bank Indonesia’s steady policy rate and inflation near target suggest a balanced approach. The GDP moderation reduces pressure for aggressive tightening but keeps the door open for gradual normalization.

Market lens

Immediate reaction: The IDR rallied 0.30% post-release, while 10-year government bond yields declined 5 basis points, reflecting improved risk sentiment. Equity markets showed mild gains, led by commodity-linked sectors.

Looking ahead, Indonesia’s growth trajectory will depend on domestic demand resilience, external trade conditions, and policy calibration. We outline three scenarios for Q4 2025 and beyond:

Bullish scenario (30% probability)

• Global commodity prices remain strong, boosting exports.
• Domestic consumption accelerates, supported by wage growth and credit expansion.
• Fiscal stimulus on infrastructure projects intensifies.
• GDP growth rebounds to 2.50% QoQ in Q4 2025.

Base scenario (50% probability)

• Growth stabilizes around 1.40% QoQ, consistent with recent trends.
• Monetary policy remains neutral, balancing inflation and growth.
• External demand remains moderate, with some volatility in commodity markets.

Bearish scenario (20% probability)

• Global slowdown deepens, reducing export demand.
• Domestic investment contracts further amid policy uncertainty.
• Fiscal tightening weighs on growth.
• GDP growth slips below 1% QoQ in Q4 2025.

Risks to the outlook include geopolitical tensions, commodity price shocks, and potential inflation surprises. Policymakers must remain vigilant to navigate these headwinds.

Indonesia’s Q3 2025 GDP growth of 1.43% QoQ signals a moderation from a strong rebound but maintains positive momentum. The economy faces a complex mix of domestic demand resilience and external uncertainties. Monetary and fiscal policies appear well calibrated to support steady growth without stoking inflation. Financial markets have responded favorably, reflecting confidence in Indonesia’s macroeconomic fundamentals.

Investors should monitor upcoming data on inflation, credit growth, and export performance closely. The balance of risks suggests cautious optimism, with a tilt toward stable growth rather than rapid acceleration or sharp slowdown.

Key Markets Likely to React to Gross Domestic Product QoQ

Indonesia’s GDP growth data typically influences several asset classes, including equities, bonds, currency, and commodities. Market participants track these indicators closely to adjust risk exposure and policy expectations.

• JKSE: Indonesia’s main stock index, sensitive to growth and corporate earnings outlook.
• USDPHP: The Philippine peso vs. USD, often correlated with regional growth trends impacting IDR.
• USDIDR: The Indonesian rupiah’s exchange rate, directly impacted by GDP and policy shifts.
• BBCA: A leading Indonesian bank, reflecting domestic credit conditions and economic health.
• BTCUSD: Bitcoin’s price, often viewed as a risk barometer in emerging markets.

Insight: Indonesia GDP QoQ vs. USDIDR Exchange Rate Since 2020

Year	Average GDP QoQ (%)	USDIDR Average Rate
2020	0.20	14,000
2021	1.10	14,200
2022	1.50	14,500
2023	1.70	15,000
2024	1.80	14,800
2025 (YTD)	1.60	14,600

Since 2020, stronger GDP growth in Indonesia has generally correlated with a firmer rupiah (lower USDIDR). The recent moderation in GDP growth aligns with a slight appreciation of IDR, reflecting improved macro stability and investor confidence.

Frequently Asked Questions

What does Indonesia’s latest GDP QoQ figure indicate about economic health?

The 1.43% QoQ growth suggests moderate expansion, signaling resilience after a volatile year but slower momentum than mid-2025 peaks.

How does this GDP reading affect Bank Indonesia’s monetary policy?

The figure supports a neutral stance, with no immediate pressure for rate hikes or cuts, balancing inflation control and growth support.

What are the main risks to Indonesia’s growth outlook?

Key risks include global commodity price swings, geopolitical tensions, and potential domestic investment slowdowns.

Takeaway: Indonesia’s Q3 2025 GDP growth reflects a transition to steadier expansion amid external uncertainties. Policymakers and investors should prepare for a balanced but cautious growth environment.

This has been drafted with AI assistance and then thoroughly reviewed, refined, and approved by our human editorial team to ensure accuracy, and originality.