Indonesia Investments Released May 2025 Report: 'Indonesia’s Shadow Economy'

What Do We Discuss in the Report?

The main theme in this May 2025 report is the shadow economy of Indonesia (which has quite some overlap with the informal economy). What is very interesting about the Indonesian economy is that it has a huge informal sector that provides livelihoods and social protection for the majority of workers and business-owners in Indonesia. This makes it a life-saving matter.

At the same time, this is a risky situation as informal sector workers and informal sector business-owners face a number of risks that are not present in the formal domain of the economy.

To improve social conditions the Indonesian government is eager to formalize the economy. However, any swift and strict actions could actually backfire by pushing millions of people (currently living in near-poor conditions) into full-blown poverty. And so, any formalization needs to be done in a careful and gradual manner.

Related to the above, Indonesia's employment statistics are also unclear. Officially, Indonesia's unemployment rate is remarkably low (at 4.76 percent of the labor force). However, how accurate is this figure? Does it include part-time workers? Is there widespread underemployment? And does the methodology to calculate the figure actually allow it to reflect reality in the field? In the second article in this report, we zoom in on these questions.

As usual, we devote plenty of attention to economic conditions in Indonesia by examining the latest macroeconomic conditions. Do the latest economic data point at further slowing economic growth in the second quarter of 2025? After all, in the first quarter, we indeed saw slowing economic growth.

Meanwhile, other important topics that deserve some attention are the interest rate cut by Bank Indonesia in May 2025 (which certainly came as a surprise to us), and the return of deflation in May 2025.

Want to order the May 2025 report? The report (an electronic report, PDF, in English) can be ordered by contacting us through email and/or WhatsApp:

- info@indonesia-investments.com
- +62(0)882.9875.1125

Price of this report:

Rp 150,000 (or equivalent in other currencies)

Take a glance inside the report here!

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