The stability of Indonesia's financial system in Q3 2025 is an oasis of reassurance amidst the uncertainty and dynamics of the global economy. The synergy of fiscal, monetary, and financial policies are supporting factors that spark optimism for annual economic growth on target. However, there is still work to be done to ensure that this optimism actually becomes a reality.

The good news was conveyed in a press conference on the results of the regular meeting of the Financial System Stability Committee (KSSK) at Thamrin Building of Bank Indonesia, Jakarta, Monday (3/10/2025). As the last KSSK meeting in 2025, this briefing briefly explained a number of economic achievements in the third quarter of 2025 based on the results of the KSSK meeting on Friday, October 31, 2025, as well as economic projections for the ongoing fourth quarter.

Minister of Finance and ex-officio KSSK Chairman Purbaya Yudhi Sadewa explained, amidst the slowdown and sluggishness of the world economy due to the impact of the United States reciprocal tariffs, Indonesia's economic growth momentum strengthened with household consumption and investment being well maintained thanks to the support of the government together with the monetary authorities and the financial sector.

Recorded retail sales growth of 5.8% year-on-year (YoY) in September 2025, followed by manufacturing activity that returned to expansion with the Purchasing Manager Index at 51.2 in October 2025, and the Q3 trade balance surplus reaching USD 14.00 billion or 112.1% YoY growth showed the strong competitiveness of Indonesian products.

"Going forward, investment will continue to be strengthened, including through Danantara's role as a lever for private investment and efforts to create a competitive investment climate with the establishment of the Task Force for the Acceleration of Government Strategic Programs (P2SP Task Force)," said Purbaya.

On the fiscal side, the State Treasurer affirmed that APBN spending to support consumption and production activities was strengthened through accelerating the implementation of strategic programs as well as providing stimulus and incentive support for the government's priority sectors. As of the end of October 2025, he stated that the distribution of stimulus to 35.05 million beneficiary families had reached nearly Rp20 trillion.

Positive developments in economic activity and policy coordination, continued Purbaya, strengthen optimism that the economy will grow above 5.5% YoY in the fourth quarter of 2025. With the support of Rp34.2 trillion stimulus, the full year 2025 is projected to grow up to 5.2%.

"For me, it is important, because if it is above 5.5%, the President will give me a gift," said Purbaya with a big smile.

Meanwhile, in terms of monetary policy, Bank Indonesia (BI) Governor Perry Warjiyo stated that, with the position of foreign exchange reserves as of September 30, 2025 amounting to USD 148.7 billion and the rupiah exchange rate strengthening 0.21% ptp to IDR 16,630 as of October 31, 2025, external resilience and the rupiah exchange rate remain under control amid global uncertainty.

Without denying the increase in CPI inflation in October 2025 which increased to 2.86% YoY, Perry ensured that inflationary pressure was maintained within the target range by synergizing inflation control, as well as strengthening other policy mixes that support economic growth and maintain stability(pro-stability and growth), ranging from lowering benchmark interest rates, macroprudential policies that encourage credit growth, to increasing liquidity.

"There is still room for a BI Rate cut, but when and how much is what we are still considering in accordance with controlled inflation and room to encourage economic growth," Perry said.

So far, Perry continued, BI continues to observe the effectiveness of loose monetary policy transmission for rupiah exchange rate stability and prospects for future economic growth.

Healthy financial services

Macroscopic fiscal and monetary stability cannot be separated from the health of the financial services sector. Chairman of the Board of Commissioners of the Financial Services Authority (OJK) Mahendra Siregar explained, with banking credit in September 2025 growing 7.7% YoY to IDR8,162.82 trillion, the accumulation of third party funds (DPK) of banks managed to grow 11.18% YoY to IDR9,695 trillion, with current accounts, savings, and deposits growing 14.58%, 6.45%, and 12.37% YoY respectively.

The positive performance of the stock market is evidenced by the JCI which posted a gain of 16.36% qtq, with an all-time high closing record on Monday trading (3/11/2025) recorded at 8,275. Fund raising in the domestic capital market has also reached IDR 198.84 trillion, with a record 27 Public Offering plans with an indicative value of IDR 21.84 trillion.

Mahendra emphasized that OJK is committed to supporting the optimization of the role of the financial services sector in supporting Government programs. One of them is by ensuring that information in the Financial Information Service System (SLIK) containing the status of credit provision is not the only reference for assessing the eligibility of prospective debtors.

"Thus, SLIK functions as a neutral source of information and is not intended as an obstacle to the provision of credit to parties with credit quality outside the current category," Mahendra said.

Efforts to ensure the health of the financial services sector are also made by the Deposit Insurance Corporation (LPS) to encourage the effectiveness of bank handling. Chairman of the LPS Board of Commissioners Anggito Abimanyu revealed that one form of support was to handle 26 BPR / BPRS throughout 2024-2025, with details: 23 BPR/BPRS are liquidated, 1 BPR is saved with a bail-in scheme, and 2 BPR/S are in the handling process.

In addition to dealing with troubled banks, LPS also lowered the Guaranteed Interest Rate by 25 basis points (bps) from 3.75% to 3.50% for rupiah deposits in commercial banks. However, the average bank deposit interest rate is still above the TBP, with the proportion of customers who get deposit interest rates above the TBP increasing from 13% in 2022 to 32% in 2025.

"LPS together with other KSSK member institutions encourage banks to adjust deposit rates to a reasonable level, and support LPS's efforts to expand the base of the saving public through increased financial literacy and inclusion," Anggito said.

The concrete fruits of efforts to expand the community's savings base can be seen in the growth of deposits valued between Rp5-100 million which grew 8.55% and deposits above Rp100 million which grew 4.19%. This is an indication that the ability of small-scale savers is starting to increase and will continue to be encouraged as the economy accelerates in the future.

There are still tasks

KSSK's optimism regarding the impact of financial system stability on annual economic growth is well-founded. However, Deputy Director and Head of Macroeconomic Studies of LPEM FEB UI Jahen Fachrul Rezki assessed that the effectiveness of the impact of policies that have been taken to create better growth than Q2 growth needs to be rethought.

"First, we don't have seasonal factors like Q2, plus there is also pressure from demonstrations that had affected people's activities. Second, the realization of government spending is quite low compared to the previous period. Third, external pressures are also still large," said Jahen when contacted. SUARMonday (3/11/2025).

Furthermore, Jahen stated that there was hope that public consumption could grow in the third quarter. However, while retail sales increased, the Consumer Confidence Index and motor vehicle sales figures declined. These mixed signals left the public not really knowing the extent to which the stability of the financial system mitigated the pressure on the Q3 economy.

"On the other hand, optimism needs to be accompanied by government support for sectors that have a major role in the economy and reduce the misallocation of resources. Spending realization needs to be increased at the end of the year, because if it is very slow, the impact on the national economy will be minimal," he explained.

Sharing Jahen's view, Permata Bank's Head of Macroeconomics and Financial Market Research Faisal Rachman explained that the risks to the stability of the financial system that already exist today come from the domestic side, as even though fiscal and monetary policies have become expansionary, the Indonesian economy is still operating under a negative output gap that holds back demand-side pressures.

"Upside risks could arise if global uncertainty increases, leading to a sharper-than-expected Rupiah depreciation and stronger gold prices, or if increased money supply fails to translate into higher economic growth," Faisal told SUAR. SUARon Monday (3/11/2025).

A number of ways to slow inflation can be pursued by ensuring that food supply improves significantly and the government's plan to reduce the highest retail price (HET) of fertilizer by 20% proves effective, or if additional discounts on utilities (electricity, water, and/or gas) are introduced towards the end of the year.

"The key challenge for food prices now lies in how quickly the government can strengthen food security amidst increased demand from the ongoing MBG program," Faisal concluded.