Indonesia's GDP Grows 5.29% in Q2, But Sector Gaps Remain

Indonesia's economy grew by 5.29% year-on-year in the April-June quarter, outperforming economists’ expectations of 5.1%, according to official data released on Wednesday. However, the growth rate marked a slowdown from the 5.61% expansion recorded in the first quarter.

Manufacturing and Spending Drive Growth

The quarterly expansion was primarily fueled by robust performance in the manufacturing sector and increased household spending, according to Mohammad Edy Mahmud, deputy for national accounts and statistical analysis at Indonesia’s statistics agency, BPS. Together with agriculture, trade, construction, and mining, these sectors contributed 63.73% of the country’s GDP on the production side.

Uneven Sectoral Performance Raises Concerns

Despite the strong headline figure, analysts have flagged concerns about uneven growth across sectors. While manufacturing and consumer spending showed resilience, the mining and trade sectors experienced declines, highlighting vulnerabilities in Indonesia's economic structure. The economy’s reliance on government spending to sustain growth has also raised questions about its long-term sustainability.

Context and Implications

As Southeast Asia’s largest economy, Indonesia’s performance carries significant regional weight. The second-quarter growth exceeded the 4.8% estimate by the Institute for Economic and Social Research at University Indonesia, published just a day before the official data release. However, the slower pace compared to the first quarter underscores the challenges of maintaining momentum amid sectoral imbalances.

The latest figures suggest a “resilient but uneven” growth trajectory, with analysts urging caution for the coming quarters. Policymakers may need to address structural weaknesses and diversify growth drivers to ensure broader economic stability.

Source: South China Morning Post