Indonesia Q2 private consumption rises 4.97% y/y

Indonesia Q2 private consumption rises 4.97% y/y

Indonesia's economy continued to show resilience in the second quarter of 2025, with private consumption rising by 4.97% year-on-year, according to the latest data from the country's central bank. This growth was a significant contributor to the overall economic expansion, which saw the country's GDP grow by 5.12% in Q2 2025, exceeding market expectations of 4.8% [1].

The increase in private consumption was driven by a variety of factors, including improved consumer confidence and a rise in disposable income. However, the growth was not without its challenges. Government spending declined by 1.38% compared to the previous quarter, and fixed investment also showed a slower pace of growth, rising by 2.12% [1]. These factors, along with a moderation in export growth to 6.78%, reflect the broader economic headwinds faced by the country.

Despite these challenges, the Indonesian economy demonstrated a notable recovery from the slowdown experienced in Q1 2025, where GDP growth was 4.87% year-on-year. The central bank has maintained its GDP growth target at 5.2% for 2025, but recent concerns about the potential impact of new U.S. tariffs have led the Finance Minister to suggest that these tariffs could reduce GDP growth by 0.3 to 0.5 percentage points [1].

The latest data from the central bank underscores the importance of private consumption as a driver of economic growth in Indonesia. As the country continues to navigate the global economic landscape, policymakers will need to balance the need for fiscal restraint with the imperative to support domestic demand. Investors and financial professionals should closely monitor the impact of external factors, such as U.S. tariffs, on the Indonesian economy as the year progresses.

References:
[1] https://tradingeconomics.com/indonesia/gdp-growth-annual