Jakarta. Indonesia’s economic growth is expected to improve in the fourth quarter, driven by year-end consumption and accelerated government spending, but reaching the government’s full-year target of 5.2 percent remains a steep challenge.

Deni Friawan, senior researcher at the Center for Strategic and International Studies (CSIS), said festive spending around Christmas and New Year, along with pre-fiscal-year infrastructure projects, could boost activity in Q4. “The outlook for Q4 is better than Q3 thanks to increased year-end activity, which lifts consumption. The government also usually accelerates development projects before the fiscal year closes,” he said.

Interest rate cuts by Bank Indonesia and various fiscal stimulus measures are expected to provide additional support. Yet, Deni warned that the economy would need to grow roughly 5.4 percent in Q4 to meet the annual target, given Q1 growth at 4.8 percent, Q2 at 5.12 percent, and Q3 at 5.04 percent.

Q3 performance showed mixed signals. Exports remained strong, imports fell 2.09 percent to $60.39 billion (Rp 1.000 trillion), and government spending grew modestly. Household consumption slowed to 4.89 percent, and investment was driven mainly by domestic capital, which rose to Rp 279.4 trillion ($16.74 billion), or 57 percent of total national investment. Foreign direct investment fell 8.9 percent to Rp212 trillion, marking the sharpest decline since early 2020.

“Household consumption is weak, private investment remains limited, and import growth is low,” Deni said. “It’s unlikely Q3 momentum alone will push Q4 growth enough to meet the target.”

Effectiveness of fiscal stimulus is key, he added. “It’s not just the amount of stimulus, but how effectively government spending restores confidence among businesses and households,” Deni said, adding that the recent Rp200 trillion allocation to banks may have a limited impact if funds remain in the financial system rather than reaching productive sectors.

From a global perspective, the World Bank raised Indonesia’s economic growth forecast to 4.8 percent for 2025, up from 4.7 percent in April. Growth in 2026 is expected to remain at the same level, according to the World Bank’s October 2025 East Asia and Pacific Economic Update.

Overall, Deni described the government’s target as highly ambitious. “It’s difficult to expect the economy to grow 5.2 percent,” he said.