August 8, 2025 | 01:34 pm
TEMPO.CO, Jakarta - The Institute for Development of Economics and Finance (INDEF) has raised questions over Indonesia’s economic growth figure of 5.12 percent year-on-year in the second quarter of 2025, saying it surpasses most predictions and appears to contradict several key indicators suggesting a slowdown.
Senior economist M. Fadhil Hasan noted that the growth data released by the Central Statistics Agency (BPS) does not align with at least 12 leading indicators that point to a weakening economy.
"There are around 12 main indicators that actually declined in the second quarter or during the first half of 2025 when compared to the same period in 2024," Fadhil said during a public discussion titled Response to the Economic Growth in Quarter II-2025 held at his office on Wednesday, August 6.
According to Fadhil, economist projections were generally close to one another and typically did not differ much from actual performance. However, BPS reported a growth rate of 5.12 percent, while most forecasts placed it around 4.8 percent or below 5 percent.
"The government must be more transparent, open, and accountable in presenting economic growth data," he emphasized.
Fadhil also analyzed several components of the BPS data, including gross domestic product (GDP) by sector and household consumption. In his view, the figures do not accurately reflect the real conditions experienced by the public.
He cited discrepancies such as the reported 5.68 percent growth in the manufacturing sector, which contradicts the Purchasing Managers' Index (PMI) that remained below 50 during the same period.
"A PMI below 50 indicates contraction. So how can the sector be in contraction while showing significant growth?" Fadhil questioned.
He also challenged the reported 4.97 percent increase in household consumption, which accounted for 54.25 percent of GDP. According to him, there was no major event or momentum that could have driven such growth in the second quarter.
“If we look at consumption trends, there was actually a decline, and there was no seasonal factor like Eid al-Fitr or Ramadan. Yet the number still rose sharply, and that is another issue,” he said.
Fadhil then listed the following 12 key economic indicators that contradict the government’s reported growth figures:
Decline in car and motorcycle sales, which suggests lower spending by the middle and upper classes.
Manufacturing PMI remained in the contraction zone, signaling sluggish industry and weak demand.
Weakened household consumption, despite being a major GDP contributor.
Decrease in foreign direct investment, reflecting declining investor confidence.
Rising inflation, which climbed to 2.37 percent by July 2025 and eroded purchasing power.
Increase in layoffs, up 32 percent in the first half of 2025 compared to the same period last year.
Sluggish credit growth, with bank credit growth at 7.7 percent year-on-year in the first semester.
Drop in consumer confidence index, which fell from 121.1 in March to 117.8 in June 2025.
Diminished income expectations, as seen in the decline from 135.4 to 133.2 in future income outlook.
Growing external instability, due to export declines, global uncertainty, and rising geopolitical tensions.
Reduced attractiveness of Indonesian financial markets, evidenced by capital outflows of Rp59 trillion from the stock market, Rp77.4 trillion in rupiah securities from Bank Indonesia (SRBI), and net buy of government securities (SBN) at Rp59 trillion.
Falling tax revenues, with VAT and Luxury Tax revenues dropping to Rp267.3 trillion from Rp332.9 trillion in the same period of 2024. Gross revenue rose slightly by 2.3 percent to Rp1,087.8 trillion, while net revenue fell by 7 percent to Rp831.3 trillion. The tax-to-GDP ratio declined from 8.3 percent to 7.1 percent in the first semester of 2025.
According to Indef, these indicators paint a very different picture from the optimistic growth rate reported by BPS.
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