'Purbaya Effect': Indonesia's Broad Money Supply Grows 7.6% in August
Key Takeaways
|
JAKARTA, Investortrust.id — Bank Indonesia reports that Indonesia’s broad money supply, known as M2, has grown 7.6 percent year-on-year in August 2025 to reach Rp 9,657.1 trillion, signaling stronger liquidity conditions under what market observers have called the “Purbaya Effect.” The growth rate is higher than July’s 6.6 percent increase, when M2 stood at Rp 9,574.9 trillion.
The central bank’s report shows that the increase in M2 was driven by growth in narrow money (M1). In August 2025, M1 reached Rp 5,451.5 trillion, up 10.5 percent compared with a year earlier.
Quasi money, which includes time deposits and foreign currency savings, also rose. It reached Rp 4,158.2 trillion in August, up 5.6 percent year-on-year. This was supported by a 6.2 percent rise in rupiah time deposits to Rp 2,779.2 trillion, as well as an 11.8 percent jump in foreign currency savings to Rp 196.9 trillion.
Bank Indonesia Executive Director of Communications Ramdan Denny Prakoso said that M2 growth was influenced by net foreign assets, credit distribution, and net claims on the central government.
“Net foreign assets in August 2025 grew 10.7 percent year-on-year, higher than July’s 7.3 percent growth, reaching Rp 2,024.9 trillion,” Ramdan said in an official statement on Tuesday, Sept 23, 2025.
Credit growth remained a key driver. Bank lending in August 2025 rose 7 percent year-on-year to Rp 7,966.1 trillion, compared with 6.7 percent growth the previous month. Lending to corporations increased 9.9 percent, while lending to individuals grew 3.6 percent. Corporate loans reached Rp 4,357.3 trillion and personal loans totaled Rp 3,541.9 trillion.
By usage, working capital loans amounted to Rp 3,446 trillion, growing 3 percent year-on-year, slightly faster than July’s 2.8 percent rise. Growth was led by the manufacturing industry and financial, real estate, and business services.
Investment loans surged, reaching Rp 2,224.7 trillion in August, up 13 percent from a year earlier. This was supported by the manufacturing sector and the transportation and communications industry.
Analyze Indonesia’s economic indicators and liquidity shifts with InvestingPro — enjoy an exclusive discount for Investortrust readers. Click here to access the offer.
Consumer loans also expanded. They rose 7.7 percent to Rp 2,295.4 trillion in August, compared with 8 percent growth in July. Consumer lending was influenced by mortgages, auto loans, and multipurpose credit.
Property lending climbed 4.6 percent year-on-year to Rp 1,458.1 trillion, higher than the 4.3 percent pace in July. Mortgages and apartment loans grew 7.1 percent to Rp 824.1 trillion, while real estate loans rose 5.2 percent to Rp 242.7 trillion.
In contrast, construction loans continued to contract, falling 0.5 percent in August after a 1 percent decline in July.