Indonesia’s Economy Shows Strong Rebound Despite Market Volatility

Main Takeaways

● LPS Chairman Purbaya Yudhi Sadewa confirms Indonesia's economy has significantly improved since January 2025, despite concerns following a 6.12% stock market drop. ● Growth in banking sector third-party funds and a rising PMI signal a rebound in both consumer and industrial activity. ● Consumer confidence reached 107.1 in February, driven by easing inflation, better harvests, and public infrastructure improvements. ● Investors have yet to respond to updated economic data, which reflects a turnaround from late 2024’s downturn.

JAKARTA, investortrust.id – Indonesia's economy has shown signs of a strong rebound in early 2025, according to Purbaya Yudhi Sadewa, Chairman of the Indonesia Deposit Insurance Corporation. His remarks come amid investor concerns over the Jakarta Composite Index, which dropped 6.12 percent last week, sparking fears that the country’s macroeconomic conditions may be deteriorating.

Purbaya, speaking at the Konvergensi program hosted by Investortrust on Wednesday, said the steep fall in the stock index was largely based on outdated data from late 2024. “I looked into this. Up to December, yes, economic indicators were weakening—car and cement sales were down, and even the Purchasing Managers’ Index stayed below 50, indicating contraction,” he explained. “But the latest data from January and February 2025 show a significant turnaround.”

One key signal of this rebound, Purbaya noted, is the increase in third-party funds, or Dana Pihak Ketiga (DPK), within the banking sector. According to data from Bank Indonesia, DPK grew 5.3 percent year-on-year in January 2025, reaching Rp 8,599.4 trillion (approximately $548 billion), and continued its upward trend in February to Rp 8,612.5 trillion, marking a 5.1 percent annual increase.

Another major indicator of economic recovery is the rise in Indonesia’s manufacturing activity. The S&P Global Indonesia Manufacturing PMI climbed from 51.9 in January to 53.6 in February, indicating robust expansion. “That shows businesses are anticipating much stronger demand,” said Purbaya, citing feedback from business leaders.

Meanwhile, from the consumer side, Purbaya shared that the Deposit Insurance Corporation conducts monthly public sentiment surveys. The February survey showed a significant jump in the Consumer Confidence Index to 107.1—an increase of 11.4 points from the previous month—reflecting renewed optimism about both national and local economic conditions.

This improvement in consumer sentiment was supported by various factors including increased selling prices of community goods, successful harvests of staple crops, and easing inflation pressures, especially on essential goods. Other contributors included social assistance programs, improvements in public infrastructure ahead of religious holidays, and temporary reductions in electricity tariffs.

“This is a real economic rebound,” said Purbaya. “So, what happened in the market last week? Investors were still relying on data from the last quarter of 2024. They haven’t caught up with the latest figures. But if you look closely, it’s clear we’ve hit the bottom and are now bouncing back.”