Jakarta – Car sales fell, cement sales declined and jobless claims rose – but the robust third-quarter economic growth announced by Indonesia's statistics agency on Nov 5 painted a different picture from the three key indicators in the nation.
Statistics Indonesia (BPS) announced that the country's economy beat forecasts and grew 5.04 per cent between July and September 2025 compared with the same period in 2024, driven by tourism, education, business services and lower import growth, among other factors.
However, economists and business groups have warned since August 2025 that Indonesia's official growth numbers may be overstated, obscuring an actual slowdown and potentially prompting misguided policy decisions.
"BPS might be doing it to prop up positive sentiments, but it would backfire as it would lead to wrong policies and would make foreign investors lose trust in government data," said Dr Esther Astuti, who teaches in the Business and Economy Faculty at the Diponegoro University in Central Java.
Dr Esther noted how similar concerns on the validity of the growth figure were raised in August, when BPS reported a growth rate of 5.12 per cent for the second quarter of the year between April and June.
This figure had exceeded the forecasts by most economists, who put it at 4.8 per cent.
"It was a second-quarter paradox, where real income and investments fell, job loss claims rose, but the economic growth rose," said Dr Esther, who had forecast that the third-quarter economic growth would be below 5 per cent.
She also warned that foreign investors may pull out or refrain from investing in Indonesia if they no longer trust government data and are subsequently unable to measure their risks.
For decades until August 2025, statistical data provided by BPS had always widely been considered accurate.
BPS chief Amalia Adininggar Widyasanti did not respond to queries from The Straits Times.
Several economists, including Mr Vid Adrison from the University of Indonesia's School of Economy and Business, have also previously forecast a lower than 5 per cent growth, citing weak consumer demand and investment.
The key indicators – car sales, cement sales and jobless claims – showed weaker momentum, suggesting that both households and businesses are tightening their spending. Despite these signs, the government continues to project resilience, maintaining that growth remains robust.
In an Aug 14 podcast hosted by the University of Indonesia, Mr Adrison said the efficiency measures initiated by President Prabowo Subianto that were aimed at budget savings have contributed to the weakness. The efficiency drives cover spending cuts on infrastructure such as roads, civil servants' official travels and ceremonial events.
"We have seen investment pick up earlier this year, and it is now slowing down," Mr Adrison added. His think-tank published a forecast of 4.86 per cent to 4.9 per cent for the third quarter.
Mr Prabowo, in a speech on Oct 20 at a Cabinet meeting marking the first anniversary of his administration, boasted about Indonesia's open unemployment rate. The open unemployment rate – defined as those actively seeking work but currently unemployed – declined to 4.67 per cent in February 2025, the lowest since the Asian financial crisis in 1998.
However, experts argued that the government's method of calculating the employment rate to include even those who work as little as an hour per week is flawed.
Members of the Indonesian Employers Association (Apindo) told ST that what they perceived as "inflated" figures could trigger unrealistic wage increase demands from labour unions for 2026. They said this will add strain to companies already grappling with rising costs, weak demand and a depreciating rupiah.
"The labourers would think the economy is doing well, companies are doing strongly, hence it should be reflected in their pay adjustment for next year. Look at the real sales numbers. They are not so strong. We no longer trust the official numbers," a member of Apindo said on condition of anonymity.
The source also noted that tax collections – which include personal income tax and corporate income tax – in the first nine months of 2025 declined by 4.4 per cent to 1,295 trillion rupiah (S$101.3 billion), compared with the same period in 2024.
The minimum wage in cities across Indonesia is annually adjusted based on a formula that takes into account inflation rate and economic growth among others. Decisions on the figures are usually made by end-November and will be effective for the following full year.
The monthly minimum wage in the North Maluku province has more than doubled over the past decade, rising from 1.5 million rupiah to 3.4 million rupiah today, thanks to its high pace of economic growth. In contrast, East Nusa Tenggara's minimum wage has increased less than double during the same period. North Maluku's impressive economic expansion has been driven largely by a boom in nickel mining and processing activities across the province in recent years.
Automobile sales in Indonesia fell 17.4 per cent to 184,726 in the third quarter from July to September, compared with the same period in 2024, according to the Association of Indonesia Automotive Industries.
Meanwhile, Indonesia's domestic cement sales fell 2.4 per cent to 45.67 million tonnes in the first nine months of 2025, according to Indonesian Cement Association (ASI).
"Sales came in below expectation," said ASI chairman Lilik Unggul Raharjo, as cited by Jakarta-based business daily Kontan on Oct 14, attributing the decline to slowing economy and infrastructure projects such as roads and building due to the government's spending cuts.
Jobless claims by Indonesians working in factories and offices rose to 13,200 in April 2025, compared with 4,816, 4,478, and 844, respectively in the same month in 2024, 2023, and 2022, according to Indonesia's employment social security agency. Between January and April 2025, there were 52,850 jobless claims.
The ratio of the number of workers who made jobless claims to the size of the workforce rose to 25 per cent in the January-April period in 2025, compared with 12 per cent in the same period both in 2024 and 2023.