Indonesia’s growth in the second quarter unexpectedly accelerated to the fastest pace in two years, with exports and investments of an economy helped by weak loan growth and mass employment losses in production.
The gross domestic product in the three months to June rose by 5.12%from the previous year, the country’s statistical office announced on Tuesday. This exceeded the expectations of slowing down for growth of 4.8%, as can be seen from the average estimate in a Bloomberg survey. The Rupiah was hardly changed in the dollar at 16,384, while the shares increased the profits to 1% according to the data.
Economists were surprised. Outside of the pandemic, the discrepancy between forecast and actual data was the largest since the first quarter of 2014. While the economy may have benefited from interest rate, state incentive and the Eid al-Fitr vacation period, analysts are divided into the prospect.
“I doubt whether investment growth will be maintained in the second half of the year,” said Ahmad Mikail Zaini, chief economist at PT -Sukoritas in Jakarta, citing slowdown and a contraction in foreign direct investments in June.
In contrast, bank Danamon Indonesia Economist Hoosianna Evalita Situmorang said that figures in the third quarter “could continue this improvement” thanks to the state incentive; Expenditures for free school meals and other projects; Supporting monetary policy; and resistant agricultural performance.
The gross -fixed Capital formation 6.99% in the second quarter, the fastest pace in four years due to infrastructure development and machine editions, said BPS.
Nevertheless, there are also questions about the reliability of the statistics.
“We don’t have much confidence in the data,” said Capital Economics in a report after the announcement. “We have long had concerns about the reliability of GDP data Indonesian GDP. In front of pandemic, Indonesia had almost been lost for almost six years, in which the official GDP growth hardly changed from 5% y/y, and in recent years the GDP growth began again to hover the same rate.”
The private consumption, which is over half of the country’s GDP, rose by 4.97%.
“In the decade before the Covid 19 pandemic, this remains below the 5.0%trend and indicates that consumers remain careful,” wrote Tamara Mast Henderson in a report for Bloomberg Economics and forecast a further quarterly shortening over the current quarter.
In fact, there was massive numbers From jobs in textile and other industries when Chinese exporters in the country of 280 million people had unloaded. Using hard tariffs may have contributed to printing on Beijing to find new markets.
The largest economy in Southeast Asia changed a quarterly quarterly by 4.04%, more than the expansion forecast of 3.69% of economists. Exports rose by 10.67%, supported by preliminary editions before the US tariffs, which were reduced from 32% for Indonesia to 19%.
Nevertheless, there are external risks due to the deteriorating trade war and the slower global economy, which could dampen the dynamics of domestic demand and trade in the future. The higher tariffs at exports to the USA will come into force on August 7.
State issues decreased by 0.33% in the second quarter compared to the previous year, since President Prabowo Subianto repeated some government expenditure for preferred programs, including free school meals.
Prabowo will reveal the government’s expenditure plans for 2026 in his first budget speech on August 15 together with the economic growth destination of the year. The government has already reduced the GDP growth outlook from 2025 to 4.7%to 5%and said that more fiscal incentives are willing to increase purchasing power by the end of the year.
It is probably also more money support. Since September, Bank Indonesia has reduced its key interest rate by 100 basis points and pledged Further to shorten to support economic growth and to increase lending, which had dropped to a low point of two years in June.
“The more than expected pressure in Indonesia growth in the second quarter-quarterly through investments and exports-is probably not to be colored,” wrote Henderson from Bloomberg. “The effects of higher US tariffs have not yet landed. If this is the case, growth will suffer.”
