Indonesia’s economic growth moderated in the third quarter of 2025, with official figures released Wednesday showing GDP expansion at 5.04% year-on-year, down from 5.12% in the preceding quarter.
The result, while marginally above expectations from a Reuters poll forecasting 5%, underscores the government’s uphill task of delivering President Prabowo Subianto’s ambitious pledge of 8% annual growth by 2029.
The third-quarter performance puts additional emphasis on the final quarter of the year, as Indonesia seeks to reach its full-year target of 5.2% and build momentum toward the 2026 goal of 5.4% growth. The period was marked by widespread anti-government protests and a cabinet reshuffle which saw pro-growth economist Purbaya Yudhi Sadewa replace the conservative Sri Mulyani Indrawati as finance minister.
Household consumption, representing more than half of GDP, cooled to 4.89% from 4.97% in the prior quarter, according to Moh. Edy Mahmud, a senior official at Statistics Indonesia. Manufacturing, agriculture, and trade continued to support growth, but the crucial mining sector contracted amid weak global demand for coal and lower copper output in Papua.
The contraction was exacerbated by disruptions at the Grasberg mine—one of the world’s largest gold and copper operations—following a fatal mudflow incident in September that left seven dead and forced a shutdown.
Investment growth slowed to 5.04% year-on-year from a four-year peak of 6.99% in the second quarter, buoyed by machinery investment. Government expenditure rebounded 5.49% after a modest contraction previously, while exports rose 9.91% on the back of higher shipments of vegetable oil, steel, and automotive products.
On a non-seasonally adjusted, quarter-on-quarter basis, GDP rose 1.43%. The government in June approved a IDR 24.44 trillion ($1.5 billion) stimulus package, with further monthly export growth from July to September, despite the imposition of a 19% U.S. tariff on Indonesian exports in August.
For the fourth quarter, authorities announced nearly $3 billion in additional stimulus, and Bank Indonesia delivered three consecutive rate cuts before pausing at its most recent meeting. Analysts, including DBS Bank’s Radhika Rao, continue to see scope for further monetary easing to support growth.
