Indonesia GDP Growth Accelerates 5.12% Q2 Surpassing Expectations

Indonesia's GDP growth unexpectedly accelerated to 5.12% year-on-year in the second quarter, marking the fastest expansion in two years and surpassing economists' expectations of 4.8%. The growth was driven by strong household consumption, investment, and exports, with gross fixed capital formation rising 6.99%, supported by infrastructure development and machinery spending. Despite this positive data, economists remain divided on the outlook, citing concerns over slowing loan growth, contraction in foreign direct investment, and potential unreliability of official GDP statistics. The economy also benefited from recent interest rate cuts by Bank Indonesia and a finalized trade deal with the U.S., which reduced tariffs on Indonesian imports. However, risks persist due to lingering trade uncertainty, weak lending, and job losses in some manufacturing sectors amid competitive pressures from Chinese exports. Policymakers may continue to ease monetary policy and possibly introduce further stimulus measures to sustain growth in the second half of the year.