Indonesia’s Q2 2025 Growth: Strong Numbers, Fragile Foundations
Indonesia’s Q2 2025 GDP growth of 5.12% year-on-year with a sharp 4.04% quarterly jump paints an optimistic picture, driven by surging investment (+6.99%), double-digit export growth (10.67%), and robust gains in manufacturing and digital services. Yet beneath these figures lie vulnerabilities: cooling household consumption, subdued automotive sales, neutral-range manufacturing PMIs, slower FDI, and a reliance on front-loaded export and investment spikes tied to tariff timing and volatile commodity prices. Unlike the more balanced growth of the 2015–2019 period, today’s expansion is uneven and concentrated regionally, exacerbating structural weaknesses such as low productivity in labour-intensive sectors, limited export diversification, weak government spending, and insufficient policy buffers. For foreign investors, this pivotal moment presents both promise and peril: the window is open to invest strategically in sectors that can drive productivity, job creation, technological upgrade, and supply-chain integration—but only if growth is coupled with policy discipline, targeted fiscal support, trade facilitation, and enhanced economic transparency.