Business Chamber Applauds Government’s Efforts as Economy Expands 5.12% in Q2 2025
Main Takeaways
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JAKARTA, Investortrust.id — Indonesia’s economy grew by 5.12% year-on-year in the second quarter of 2025, beating market expectations and improving from 4.87% in the first quarter. The Indonesia Chamber of Commerce and Industry (Kadin) commended the government for what it called a “special gift” for the nation ahead of its 80th Independence Day.
The quarterly growth (q-o-q) also rebounded to 4.04% in Q2 2025, after contracting 0.98% in the first quarter. The positive momentum helped Indonesia avoid a technical recession, which is typically defined as two consecutive quarters of negative growth.
Kadin Chairman Anindya Bakrie said the performance should be seen as the result of government reforms and fiscal flexibility. “This is a testament to the government’s hard work. It gives a boost of optimism to the business community. It is a special present for the people of Indonesia,” Anindya said in a written statement on Tuesday, Aug 5.
According to Statistics Indonesia (BPS), the economy expanded 4.99% in the first half of 2025, supported by the 4.87% growth in Q1 and 5.12% in Q2. While slightly below the 5.08% recorded in H1 2024, Anindya said the latest figures show meaningful improvement and renewed business confidence.
Government Policy Shifts Pay Off
Anindya outlined several key reasons behind the improved growth. First, he pointed to the gradual easing of government spending restrictions. Public spending contracted 2.9% year-on-year in Q1 2025 but shrank only 0.33% in Q2, signaling a return of fiscal support to the economy.
Second, investment activity significantly accelerated. Gross fixed capital formation (PMTB) surged 6.99% in Q2, up sharply from 2.12% in Q1. “This reflects the government’s success in attracting investment and improving the ease of doing business,” Anindya said.
Third, household consumption also rebounded modestly, growing 2.64% year-on-year in Q2 after declining 4.89% in Q1. “Though still below GDP growth, the positive trend in consumption is encouraging,” he added.
Fourth, exports improved despite global trade headwinds. Goods and services exports rose 2.43% year-on-year in Q2, recovering from a 6.78% contraction in Q1. Anindya credited this to the government’s efforts to diversify markets and diplomatically resolve tariff issues—particularly with the U.S., which under President Donald Trump imposed reciprocal tariffs earlier this year.
Fifth, the manufacturing sector emerged as the engine of growth. The sector expanded 5.88% in Q2, outpacing overall GDP and contributing 1.13 percentage points to the quarter’s growth. This compared favorably to a 4.5% expansion and 0.93-point contribution in Q1.
Finally, Anindya said several of the government’s “quick win” programs have begun delivering results by boosting purchasing power and stimulating domestic activity.
Targeting 8% Growth
Looking ahead, Kadin expressed confidence that Indonesia could gradually reach 8% annual growth, in line with President Prabowo Subianto’s ambitious economic agenda. Key programs under implementation include the Free Nutritious Meals (MBG) initiative, the Red-and-White Village Cooperative network, Gotong Royong Health Clinics, a nationwide housing renovation drive, expanded migrant worker placement schemes, and a broadened microcredit program (KUR).
President Prabowo is also prioritizing food and energy security, downstream industrialization, and national industrial capacity to lay the foundation for long-term, inclusive growth. “With the spirit of Indonesia Incorporated and collective cooperation, our economy will keep progressing,” Anindya said.
To align itself with the national agenda, Kadin plans to hold a four-day retreat from Thursday, Aug 7 to Sunday, Aug 10, at the Indonesian Military Academy in Magelang, Central Java. “This retreat aims to produce patriotic entrepreneurs with a global vision and a strong moral compass to help realize social justice,” Anindya concluded.
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