16 September 2025 (closed)
Jakarta Composite Index (7,957.70) +20.58 +0.26%
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Amid the hectic environment, with trade talks between Indonesia, the United States (US) and the European Union (EU), ongoing geopolitical turmoil in Eastern Europe and the Middle East, shifting political alliances, a US Federal Reserve that may hold its benchmark interest rate steady for longer, and subdued global economic growth, it is interesting to take a look at how the Indonesian economy is performing.
As usual, we are going to take a close look at the latest available macroeconomic data of Indonesia to assess the current state of the Indonesian economy. Last month, we came to the conclusion that –overall– conditions seemed a bit weakening (with most macroeconomic indicators revealing some softness), thus suggesting that economic growth is (further) slowing in Indonesia.
In another article in this May 2025 edition, we discussed Indonesia’s Q1-2025 gross domestic product (GDP) data in detail. So, the focus of the article you’re reading right now will be on the latest economic data of Indonesia (that cover the second quarter of the year).
The long Idul Fitri holiday (that ends on 7 April 2025) somewhat disrupts our access to Indonesia’s macroeconomic data as much of the private and public sector is closed during this holiday (hence do not release any data during this period).
On 5 February 2025, the Statistical Agency of Indonesia (Badan Pusat Statistik, BPS) announced that Indonesia’s gross domestic product (GDP) was recorded at a growth rate of 5.03 percent year-on-year (y/y) in 2024. In another article in this month’s edition, we devote an analysis concerning Indonesia’s 2024 GDP growth.
Ever since the second half of 2023 car sales in Indonesia have been quite disappointing. While in recent years Indonesia had become used to seeing more than one million cars being sold across the country per year (excluding the COVID-19 crisis period), sales now seem to have stabilized around 850,000 units per year in the 2024-2025 period.
In last month’s report we saw that Indonesia’s official economic growth rate was (in line with expectations) quite strong at 5.11 percent year-on-year (y/y) in Q1-2024. Moreover, last month we also saw that most of the macroeconomic data point at the continuation of strong growth in Q2-2024 (with the only major exception being the country’s car sales data that still showed deep red numbers).
On Sunday (04.02.2024) Indonesia Investments released the January 2024 edition of its monthly report. The report offers analyses of various economic, political and social topics that are relevant in the present.
At the annual meeting of Indonesia’s central bank (Bank Indonesia) at the very end of November 2023, Bank Indonesia Governor Perry Warjiyo said the central bank is optimistic about accelerating economic growth in the next two years (2024 – 2025).
Like with most sectors, the automotive sector of Indonesia received a wave of fresh air as most of the COVID-19-related social and business restrictions were scrapped by the government at the end of 2022. And, when the government also scrapped the vaccine-booster requirement for traveling into, and across, the country in June 2023 we can argue that the COVID-19 crisis is truly over.
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In early 2016 Ford Motor Indonesia, the local unit of American car-maker Ford Motor Company, announced it will have completed its exit from Indonesia (and Japan) by the start of 2017. This decision was made because Ford has been unable to compete with its Japanese counterparts on the markets of Indonesia and Japan. The sudden move to exit Indonesia was not warmly welcomed by Ford Motor Co's dealers in Indonesia. The 31 Ford local dealerships demanded USD $75 million in compensation. More recently, Ford Motor Indonesia has become the center of a tax scandal.
The Indonesian Automotive Industry Association (Gaikindo) raised its target for Indonesia's car exports (completely built up units, or, CBU) to 220,000 vehicles in 2016. This figure implies Gaikindo targets to see a 6 percent (y/y) increase in car exports from 207,691 units last year. Gaikindo Chairman Jongkie Sugiarto said the global economy has started to stabilize and this should have a positive effect on Indonesia's car shipments.
One of the leading diversified conglomerates in Indonesia, Astra International, is facing challenges. Demand for cars has been on the decline in Indonesia over the past two years. This is a big challenge for the company because the automotive sector accounts for about half of Astra's total earnings. Meanwhile, its heavy equipment & mining segment and the financial services segment have been under severe pressure. Net income in the heavy equipment & mining segment plunged 55 percent (y/y) in Q1-2016, while net income in the financial services segment tumbled 46 percent (y/y) over the same period.
Astra International, one of Indonesia's largest diversified conglomerates and regarded the barometer of the Indonesian economy due to the company's presence in most sectors of the economy, posted a 22 percent (y/y) decline in net profit to IDR 3.11 trillion in the first quarter of 2016. Meanwhile, its revenue fell 7 percent (y/y) to IDR 41.89 trillion over the same period. The weak financial performance was particularly attributed to weak earnings of the company's heavy equipment unit United Tractors. Shares of Astra International fell 5.21 percent on Wednesday's trading day (27/04) to a seven-week low.
To assess Indonesia's purchasing power and consumer confidence it is always useful to take a look at car and motorcycle sales because when people are confident about their financial situation and have enough money to spend then they tend to buy cars and motorcycles (motorcycles are particularly popular among Indonesia's huge middle to lower-middle class segment). Meanwhile, cement sales inform about property and infrastructure development. Property development is also closely related to purchasing power and consumer confidence because property development grows when people's demand for property rises.
Car sales in Indonesia continued to decline. Based on the latest data from the Indonesian Automotive Industry Association (Gaikindo) Indonesian car sales (delivery to dealers) fell around 10 percent year-on-year (y/y) to 84,885 vehicles in the first month of the year from 94,194 units in January 2015. Retail sales, on the other hand, showed a 1 percentage point growth to 82,423 vehicles over the same period.
Whereas the Indonesian Automotive Industry Association (Gaikindo), expects Indonesia's car sales to rise five percent (y/y) in 2016 on the back of improving economic conditions, US-based consulting firm Frost & Sullivan expects to see a 4.3 percent decline in the country's car sales this year as continued rupiah depreciation and persistently low commodity prices undermine Indonesians' purchasing power.
Both car sales and motorcycle sales declined in 2015 in Indonesia. Primary reason for this decline was people's weaker purchasing power amid the slowing economy and persistently low commodity prices. Indonesia's GDP growth is estimated to have fallen to 4.7 percent year-on-year (y/y), the slowest growth pace since 2009. Meanwhile, amid the sluggish global economy (especially China's slowdown) and falling oil prices, Indonesia gains relatively little from its commodity exports.
The performance of Astra International, one of Indonesia's leading diversified conglomerates (but particularly known for being the dominant force in the country's automotive industry), is expected to improve next year on the arrival of new car models, estimated accelerated economic growth and its rivals' stagnating production capacity expansion. As such, Astra International should be able to increase its market share and feel less need to offer its cars to customers at discounted rates.
Indonesian car sales may rise up to ten percent (y/y) to 1.1 million vehicles in 2016, from an estimated 1 million this year, amid accelerating economic growth in Indonesia. Car sales in 2015 have been disappointing, declining 18 percent (y/y) to 853,008 units in the first ten months of 2015, due to people's weakening purchasing power. Sales in 2016 are expected to be boosted by sales of the low-cost green car (LCGC), which was introduced on the Indonesian market in late-2013, and the crossover utility vehicle, a car that has gained popularity recently.
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