Reciprocal Tariffs Boost Indonesia’s Exports as BI Sees Stronger Q4 Growth

JAKARTA, Investortrust.id — Bank Indonesia Governor Perry Warjiyo says the U.S. reciprocal tariff policy has unexpectedly fueled a surge in Indonesia’s exports during the third and fourth quarters of 2025, helping drive faster economic growth.

“We are grateful that national growth in the third and fourth quarters has been solid, partly due to a sharp rise in exports to the United States—what we call front loading,” Perry told lawmakers during a hearing with the House of Representatives Commission XI on Wednesday, Nov 12, 2025, in Jakarta.

Bank Indonesia’s reference to “front loading” reflects the rush by exporters to ship goods to the United States ahead of the full enforcement of Washington’s reciprocal tariff regime on August 7, 2025. The initial baseline tariff began in early April, but the higher, country-specific rate for Indonesian products—set at 19 percent—took effect in August.

In the weeks leading up to that date, many Indonesian manufacturers accelerated production and export schedules to clear shipments before the higher tariffs applied. This surge lifted export volumes sharply in late Q2 and throughout Q3, while some of the backlog continued into early Q4 as orders already secured under pre-tariff terms were fulfilled.

Exporters accelerated shipments ahead of the full implementation of Washington’s tariff measures, he said. In addition to exports, growth was supported by resilient investment and steady domestic consumption. “Domestic spending continues to strengthen, and we are pushing to sustain that momentum,” Perry added.

Indonesia’s economy expanded 5.04 percent in the third quarter, driven by 9.91 percent export growth, 4.89 percent household consumption, and 5.04 percent investment. Bank Indonesia expects growth to accelerate further in the fourth quarter, underpinned by fiscal stimulus, government project execution, social assistance programs, and targeted policy packages.

“Overall, we estimate full-year growth in 2025 at around 4.7 to 5.51 percent, with the midpoint slightly above 5.1 percent,” Perry said.

He cautioned, however, that the global economy is likely to slow in 2026 as reciprocal tariffs weigh on growth in both the U.S. and China, despite continued expansion in Europe and India. “Global growth in 2025 will be lower than in 2024,” he said.

According to BI’s outlook, global GDP growth is projected to ease from 3.3 percent in 2024 to 3.1 percent in 2025, and further to 3 percent in 2026. Inflation, meanwhile, is expected to hover at 4.3 percent in 2025 before easing to 4.1 percent in 2026. “This pattern of slower growth alongside elevated inflation affects both the pace and timing of monetary policy easing worldwide,” Perry said.

Complementing BI’s forecast, Bank Mandiri also projects Indonesia’s economy to remain on a strong trajectory, expanding between 5 and 5.1 percent in 2025. The bank attributes the momentum to improving global sentiment, a gradual easing of geopolitical tensions, and a more expansionary policy mix at home.

“I’m optimistic growth will be in the 5 to 5.1 percent range next year. We’re seeing early signs of acceleration, which should translate into stronger job creation,” said Head of Macro and Financial Market Research at Bank Mandiri, Dian Ayu Yustina, in an interview at the Indonesia Stock Exchange on Monday, Nov 10, 2025.

Dian pointed to an uptick in household spending as reflected by the Mandiri Spending Index (MSI), which climbed to 300.6 as of Oct 26, up 1.1 percent week-on-week, with gains spread across all regions and led by areas outside Java. “This rise in consumption is a positive signal. When spending grows, it creates a multiplier effect—corporates respond to better demand, and their performance improves,” she said.

Corporate fundamentals remain healthy, she added, citing a low non-performing loan ratio across the banking sector. Maintaining the growth momentum, she said, will depend on sustaining pro-growth fiscal and monetary policies and strengthening consumer confidence.

Dian also highlighted ongoing government incentives, such as the extended property tax relief through 2027, as additional growth drivers. “These measures should help lift credit growth into double digits by 2026—potentially above 10 percent,” she said.