Indonesia’s economic growth of 5.12% in the second quarter of 2025 may sound encouraging. However, behind this impressive figure, several economists have raised critical notes. Jeemin Bang of Moody’s Analytics observed that consumer confidence is weakening, industrial activity is slowing, and youth unemployment remains high. Retail sales have also stagnated due to insignificant growth in real wages.
A Reuters poll revealed that 26 economists actually forecast growth at only 4.8%. This disparity raises the question: is the economy truly recovering, or is it merely boosted by temporary factors?
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A temporary export surge
One of the main drivers of this quarter’s growth was an 11.29% surge in exports in June 2025, spurred by accelerated shipments ahead of U.S. tariff implementation. Economist Radhika Rao referred to this phenomenon as “frontloading”—a one-off boost that may not recur in the following quarter. Meanwhile, household consumption remains weak, as reflected in stagnant consumer confidence and vehicle sales.
Stimulus and structural challenges
The government has responded with a US$1.5 billion stimulus package. However, some economists believe this policy is more populist than productive. Without the creation of formal jobs and increased productive investment, the economic foundation is feared to remain fragile. Institutions such as the IMF and AMRO have even revised down Indonesia’s growth forecast to 4.7–4.8% for this year.
A message for the business sector amid 5.12% economic growth
For business players, this is a moment to be both cautious and innovative. The focus should be on operational efficiency, strengthening the domestic market, and creating long-term value. In times of uncertainty, businesses that adapt quickly and innovate are more likely to emerge stronger. Growth is worth celebrating, but vigilance must remain.
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