Purbaya Sees 5.5% Q4 Growth as Government Speeds Up Programs
Key Takeaways
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JAKARTA, Investortrust.id — Finance Minister Purbaya Yudhi Sadewa says Indonesia’s economy is set to expand by more than 5.5% in the fourth quarter of 2025, supported by the government’s accelerated implementation of strategic programs through a newly established inter-ministerial task force and three working groups.
“The task force will ensure that all government programs are carried out efficiently. What matters most to me is that every budget allocation is absorbed as planned, on target, and on time,” Purbaya said after attending a coordination meeting on the Acceleration of Government Strategic Programs at the Coordinating Ministry for Economic Affairs in Jakarta on Wednesday, Oct 22, 2025.
He stressed that the government would reallocate any unspent funds toward more productive sectors. “I hope that this quarter our economy can grow above 5.5%, and in the following quarter even faster,” he added.
According to Purbaya, three working groups were formed with distinct mandates. The first focuses on accelerating budget realization and implementation of strategic government programs. The second works to expedite execution while addressing operational bottlenecks. The third concentrates on regulatory completion and law enforcement to underpin program delivery.
Purbaya also plans to hold weekly forums to receive feedback and complaints from business actors, aiming to improve coordination and responsiveness across ministries.
He emphasized that the cross-working group system will gradually reduce bureaucratic barriers and speed up both budget absorption and improvements in the investment climate.
“I expect that within several months, perhaps in half a year, our investment climate will improve significantly. This will allow the economy to grow even faster than it is now,” Purbaya said.
Monetary Policy & Global Context
Indonesia’s quarterly GDP data show steady but moderate momentum. The economy expanded 5.12% year-on-year in the second quarter of 2025 — the fastest pace since 2023 — yet it has rarely reached or exceeded 5.5% in the past few years. Sustaining growth beyond that threshold remains a key challenge for policymakers as domestic demand and investment recovery move unevenly.
Bank Indonesia, meanwhile, kept its benchmark BI Rate unchanged at 4.75% on Wednesday, maintaining the level set after a surprise rate cut in September — a move made one day ahead of the U.S. Federal Reserve’s policy decision. The central bank’s cautious stance reflects a balance between supporting growth and safeguarding the rupiah, which has remained volatile.
“The [September] rate cut was surprising, as most economists expected Bank Indonesia to pause after two consecutive reductions earlier in the year,” Ezra Nazula, Director and Chief Investment Officer for Fixed Income at PT Manulife Aset Manajemen Indonesia, wrote in a statement.
He explained that unlike the U.S., where inflation remains elevated, Indonesia’s central bank has more room to ease policy. “Inflation is contained, real interest rates are still high, and economic activity remains sluggish. That made a September cut reasonable,” Ezra said.
According to him, Bank Indonesia’s decision to hold rates this month is consistent with its strategy to observe transmission effects before further action. “The impact of lower rates on lending and deposit rates has yet to fully materialize because liquidity is still tight. The central bank wants to give time for transmission to take hold before deciding its next move,” he added.
Ezra expects that a combination of monetary easing and fiscal liquidity injections — resulting from Finance Minister Purbaya’s decision in September to transfer idle government funds from Bank Indonesia to commercial banks — will gradually stimulate credit growth and business activity. “Given that the easing cycle began in September 2024, we should start seeing clearer improvements in 2026,” he said.
He also noted that the labor market is showing early signs of stabilization. “Monthly layoffs have eased from their peaks in 2024 and early 2025, while active BPJS Employment participants have risen for two straight months. This gives hope that pro-growth measures are beginning to filter through, albeit slowly,” Ezra said.