8 August 2025 (closed)
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Latest Reports Credit Growth
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.
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).
In this article we are taking a quick look at various macroeconomic data that help us assess the state of the Indonesian economy in the first quarter of 2024. This update is much more succinct than our normal economic update because we already have one article devoted to the Indonesian economy in this report (zooming in on the Q3-2023 and full-year gross domestic growth data of 2023).
Although in some respects Indonesia has exited the COVID-19 crisis (for example, the economic recession ended in Q2-2021, and the number of new COVID-19 cases and deaths eased significantly), the road ahead is uncertain and full of challenges.
Consumer credit has been the driver for credit growth in Indonesia's banking sector in the first two months of 2018. Within consumer credit it are the multipurpose and motor vehicles segments that show good growth. Based on data from Indonesia's central bank (Bank Indonesia) consumer credit grew 11.1 percent year-on-year (y/y) to IDR 1,392.4 trillion (approx. USD $101.6 billion) in February 2018, accelerating from a 10.4 percent (y/y) growth pace in the preceding month.
Bank Indonesia, the central bank of Indonesia, said credit growth in the domestic banking sector reached 7.4 percent year-on-year (y/y) per November 2017, lower than the growth rate in the preceding month (8.1 percent y/y). In absolute terms credit growth in Indonesia's banking sector stood at IDR 4,635 trillion (approx. USD $343 billion) in the January-November 2017 period.
Latest Columns Credit Growth
We are gradually approaching the first 100 days in office of the new administration in Indonesia (under the leadership of President Prabowo Subianto). Does that show in the latest economic indicators?
As usual, we devote one article to the latest available (key) macroeconomic data in an effort to assess the state of the Indonesian economy. In the previous article in this month’s report, we discussed the 4.95 percent year-on-year (y/y) GDP growth rate of Indonesia in Q3-2024. In the article you are reading right now, we’re going to take a closer look whether the country’s economic growth can accelerate (or decelerate) in the last quarter of the year.
Before we zoom in on Indonesia, it is worth taking a closer look at the latest reports released by the International Monetary Fund (IMF). In its World Economic Outlook (released in October 2024), the IMF stated that global economic growth is expected to remain stable, yet underwhelming, at 3.2 percent year-on-year (y/y) in 2024.
As usual, we look at the latest available macroeconomic data of Indonesia to assess the strength of the national economy. Those who follow this monthly article should know that we are quite optimistic about the Indonesian economy as the majority of data are showing positive trends.
Before turning our attention to the economy of Indonesia, it is important to take a closer look at the global economy first. Fortunately, the Organization for Economic Cooperation and Development (OECD) just released a new update (called the OECD Economic Outlook, Interim Report September 2022) and so it’s certainly worthwhile to take a look at its conclusions.
There are reasons to be optimistic about Indonesia’s economic activity in the fourth quarter of 2021. Obviously, the underlying reason being that new confirmed COVID-19 infections have not been far from zero in Indonesia throughout the final quarter of the year. As a consequence, the government of Indonesia did not need to impose tough restrictions, hence economic activity is allowed to blossom.
At a special occasion at the Presidential Palace in Jakarta, Indonesian President Joko Widodo urged local banks to become more aggressive in terms of lending as credit disbursement in Indonesia's banking sector only reached IDR 4,782 trillion (approx. USD $349 billion) in 2017, hence growing by only a modest 8.3 percent year-on-year (y/y), thus unable to provide an optimal boost to domestic economic growth.
The central bank of Indonesia (Bank Indonesia) kept its benchmark interest rate (seven-day reverse repo rate) at 4.75 percent at the April policy meeting (19-20 April 2017), while its deposit facility rate and lending facility rate stayed at 4.00 percent and 5.50 percent, respectively. Bank Indonesia considers the current interest rate environment appropriate to face global uncertainties as well as rising inflationary pressures at home.
Bank Indonesia cut its projection for credit growth in the nation's banking sector this year from the range of 10 - 11 percent year-on-year (y/y) to 7 - 9 percent (y/y). This downward revision is in line with the central bank's earlier decision to cut its forecast for economic growth from the range of 5.0 - 5.4 percent (y/y) to 4.9 - 5.3 percent (y/y) in 2016. The slightly less rosy outlook is caused by the Indonesian government's decision to cut spending for the remainder of the year, while global economic growth remains subdued.
Bank Negara Indonesia (BNI), one of the leading banks in Indonesia, is expected to maintain rising net profit figures in the years ahead due to its decision to focus on (corporate) credit disbursement for domestic infrastructure development projects. In fact, according to RHB OSK Securities, BNI may become the state-controlled bank that benefits most from the government decision to raise its infrastructure budget to IDR 313.5 trillion (approx. USD $24 billion) in the 2016 State Budget. Last year, growth of credit disbursed by BNI to infrastructure projects climbed 116.2 percent (y/y). This year infrastructure credit may grow by another 19 percent.
