Mumbai, Nov 13 – Indonesia’s economy is navigating a decisive phase as global trade dynamics shift and domestic priorities evolve. With the US imposing a 19% tariff on Indonesian goods and export demand softening, the country is turning inward by focusing on structural reforms, digital investments, and market diversification to sustain momentum. Against this backdrop, Rubix Data Sciences, a leading risk management and monitoring company, has released its latest Country Insights Report on Indonesia, analysing how Southeast Asia’s largest economy is balancing growth, resilience, and reform to close 2025 on a steady note.
According to the report, Indonesia’s GDP grew 5.12% in Q2 CY2025, its fastest pace in two years, before moderating slightly to 5.04% in Q3. The final quarter will be crucial in determining whether the government achieves its 5.3% annual growth target, as softer household spending and slower exports weigh on momentum. Even so, Indonesia’s economic fundamentals remain strong. The IMF projects GDP growth at 4.9% for both CY2025 and CY2026, rising to 5.0% in CY2027, reflecting a stable and positive medium-term outlook.
Trade trends in the first two quarters of CY2025 reveal a rebalancing of Indonesia’s external dynamics. Imports outpaced exports, driven by robust domestic demand for capital goods and raw materials. China is reinforcing its position as Indonesia’s largest trade partner, accounting for 31% of imports and 24% of exports, while India has overtaken Japan to become the country’s third-largest export destination.
The 19% tariff imposed by the US in July 2025 is expected to push Indonesian exporters toward higher-growth, lower-tariff markets such as China and India.
However, the recalibration of trade ties has also affected bilateral flows. India-Indonesia bilateral goods trade declined from USD 38.8 billion in FY2023 to USD 28.2 billion in FY2025. India’s imports from Indonesia fell 11% for the same period annually, largely due to reduced coal purchases and evolving palm oil policies, while India’s exports to Indonesia halved over two years, despite a growing share of petroleum products in the basket.
Amid these external shifts, Indonesia is increasing domestic reforms to reinforce investor confidence and long-term competitiveness. The government has cut the minimum paid-up capital requirement for foreign companies by 75%, easing market entry for global investors. It is also establishing six new Special Economic Zones (SEZs), including the nation’s first Halal Hub in East Java, to drive industrial and export-led growth.
Trade liberalisation efforts are advancing rapidly. The EU–Indonesia Comprehensive Economic Partnership Agreement (CEPA), concluded in September 2025, will eliminate tariffs on 98% of trade lines, expanding market access for key sectors such as palm oil, textiles, and automotive goods.
In parallel, Indonesia is investing heavily in its digital future. The National AI Roadmap (2025-2045) aims to create 100,000 AI professionals annually, catalysing innovation and productivity across sectors. Complementing this is the new risk-based business licensing regulation (GR 28/2025), which introduces a “deemed approval” mechanism to enhance transparency and ease of doing business.
“The year 2025 has tested Indonesia’s external resilience while highlighting its internal strengths,” said Mohan Ramaswamy, Co-Founder and CEO, Rubix Data Sciences. “Even as export headwinds and new trade barriers test its resilience, the country’s policy reforms, digital ambitions, and trade diversification are laying the groundwork for a more balanced and future-ready economy. The real opportunity lies in how Indonesia leverages these structural shifts, to secure sustainable growth and long-term stability,” he added.
As Indonesia adapts to shifting global and regional trends, the Rubix report highlights how its approach to trade, policy, and innovation is setting the stage for sustainable expansion. With fiscal prudence, structural reform, and a growing digital backbone, Indonesia is well-positioned to strengthen its role as a key growth engine for the ASEAN region in the years ahead.