TheJakartaPost
Please Update your browser
Your browser is out of date, and may not be compatible with our website. A list of the most popular web browsers can be found below.
Just click on the icons to get to the download page.
Popular Reads
Top Results
No results found. Please check your search term and try again
Can't find what you're looking for?
View all search results
Popular Reads
Top Results
No results found. Please check your search term and try again
Can't find what you're looking for?
View all search resultsThe Sumatra disaster will increase our fiscal risk
The Sumatra flooding and landslides necessitate a review of the risk factors noted in next year's state budget, as natural disasters pose massive economic losses both locally and nationally.
Change text size
Gift Premium Articles
to Anyone
Share the best of The Jakarta Post with friends, family, or colleagues. As a subscriber, you can gift 3 to 5 articles each month that anyone can read—no subscription needed!
A man with a hoe walks down a street filled with mud and littered with roadside debris on Dec. 6, 2025, after a flash flood hit Aceh Tamiang regency, Aceh. (AFP/YT Hariono)
T
he flash flooding and landslides that hit the provinces of Aceh, North Sumatra and West Sumatra were another shock for Indonesia's economy, as they came at a time when its economic growth prospects were getting better.
The export sector still showed resilience amid fractious world trade relations and global uncertainties. In the first 10 months, Indonesian exports grew 7 percent compared to the same period in 2024.
Exports to the United States were increasing despite President Donald Trump’s tariffs. In the third quarter, US-bound exports reached US$8.2 billion, increasing from $7.5 billion in the second quarter. Imports grew 2.2 percent, indicating that the contribution of net exports to GDP growth would remain strong.
Imports of raw materials contracted 1.25 percent, dragged down by a steep 12.6 percent fall in oil and gas imports. Excluding oil and gas, raw materials imports were up 5 percent.
Imports of capital goods rose significantly at 18.5 percent, which would increase gross fixed capital formation (GFCF) to support overall GDP growth. Together with government efforts to push up consumption through providing stimulus and positive net exports, GDP growth in the fourth quarter should remain strong.
However, foreign direct investment (FDI) flows slowed down, reaching $7.7 billion over the first three quarters this year, compared with $10.2 billion for the same period last year. As a share of GDP, FDI flows reached 0.7 percent, lower than the 1.5 percent recorded in 2024. Over the same period, FDI flows to Malaysia reached 3 percent of GDP while FDI flows to Vietnam booked 6 percent of GDP.
External conditions are not as grim as before. The effect of US tariffs has been moderate, as Trump has softened his tone and is no longer threatening and intimidating. He has given several tariff exemptions and has been more open to trade negotiations.
