Pranjul Bhandari, Chief Economist for Indonesia and India at HSBC Global Research, stated that he was not surprised by Indonesia’s economic growth of 5.12% in the second quarter of 2025. He noted that much of this growth was supported by the informal sector.

According to Pranjul, the economic expansion during this period was driven by both investment and consumption. Upon closer examination, it turned out that the investment supporting growth primarily came from government capital expenditure.

He compared the current data with previous periods and found that the Indonesian government spent more on capital expenditure in the second quarter of this year than in the previous quarter.

“I see many consumption indicators showing improvement compared to before. For example, spending on food, fuel, clothing, and apparel has increased,” Pranjul said during an online Media Briefing on Friday (August 8, 2025).

He explained that this achievement was influenced by lower inflation, rising wages, and government policies targeted directly at the public. This upward trend in consumption also made the informal sector an important driver of Indonesia’s economy.

Pranjul emphasized that the informal sector plays a significant role in the economy, contributing 60% to job creation and 55% to national consumption.

“Car sales, credit card transactions, and imports of consumer durables have weakened compared to before. However, household consumption has strengthened. I believe this is what kept GDP figures strong in the June quarter. So, when we received the Q2 GDP growth data a few days ago, we were actually not surprised,” he explained.

Nevertheless, he believes that the current growth is still insufficient. He urged the government to encourage greater corporate investment to sustain economic momentum.

“We need higher and longer-lasting growth. The way to achieve this is by increasing corporate investment. At the moment, many companies prefer to save rather than invest,” he concluded.