Industry leads growth
The Central Board of Statistics released its report on the National Accounts Data, which showed a rate of growth in the economy of 5.12% Y/Y in Q2 2025. The report became controversial since most economic observers had predicted that the economy would slow further in Q2 from the less-than-5% growth in the previous quarter. However, a high official of the Central Board of Statistics defended the credibility of the report in an open discussion with observers and analysts.
What is most interesting from this report is that the rate of growth of the economy drew a great deal of support from the rate of growth of the manufacturing sector, which expanded by 5.68%. Most probably, some of the “growth” in this sector was derived from the upward revision of the GDP numbers in this sector, which was justified. This led me to conclude that Indonesian economic growth has all along been driven by the manufacturing sector.
With its rate of growth of 5.68%, Indonesia's manufacturing sector contributed 1.13% of the rate of growth of the economy, or 22% of the contribution to the 5.12% overall economic growth. It is hoped that the rate of growth of manufacturing can remain at a higher level than the rate of growth of the economy, which in the end would tone down the “de-industrialization” issue that has lived in the Indonesian economic debate for some time.
The Central Board of Statistics in Indonesia also released its balance of trade report for June 2025. The trade balance registered another surplus, although a bit lower than the previous month. The surplus in June was $4,103.5 million compared with the $4,301.5 million achieved in May. The total trade surplus for the first six months of 2025 stands at $19,478.6 million, 25.02% higher than the $15,580.9 million achieved in the same period of the previous year. Exports in month of June reached $23,436.5 million while imports were $19,333 million. Cumulative exports from January to June 2025 were $135,413.8 million while cumulative imports for the same period were $115,935.2 million.
The Central Board of Statistics also reported the Consumer Price Index for July 2025, which registered inflation of 0.30%. With that monthly inflation, Y/Y inflation in July reached 2.37%, a level still within the inflation corridor administered by the Central Bank. Against that background, Bank Indonesia lowered the benchmark rate by 25 basis points to 5.25% at its policy meeting of July 15-16th, 2025.
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