A rate cut that surprised many … but will it hold? An inflation jump that’s nothing we’d bat an eyelid at in most other markets we cover, but which has drawn our focus. An economic growth jump, with strong forecasts for the year – some are dubious, we are not.
Tariffs & GDP Effects
As we reported last month, the US and Indonesia concluded tariff negotiations with the new regime commencing on August 7th; a uniform 19% US tariff is now being applied to Indonesian goods entering the US, the same rate being applied to Philippine, Cambodian, Malaysian and Thai goods. At the same time as it announced the interest rate cut (see below), Bank Indonesia (BI) pointed to data showing that economic growth had accelerated to 5.12% in Q2 ’25 – the fastest growth in two years – and driven by household spending and investment. Whilst some concern persists over the impact weakening domestic demand, and of US tariffs, we’re less concerned about the latter – trade with the US only accounts for 2% of I...
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