FX.co ★ Indonesia Loan Growth Eases to Over 3-Year Low

In June 2025, the annual growth of loans in Indonesia slowed to 7.77%, a decline from the previous month's rate of 8.43%, marking the slowest increase since March 2022. This deceleration is attributed to a weakening purchasing power, a shrinking middle class, and heightened caution among banks when extending credit. Growth in third-party funds increased by 6.96% year-on-year, leading banks to channel more resources into securities and implement stricter credit distribution standards. Loan growth slowed down across all principal categories. Consumption loans saw an increase of 8.49%, slightly down from 8.82% in May. Investment loans grew at a reduced rate of 12.53%, compared to 13.74%, while the growth of working capital loans experienced a minor decline to 4.45% from 4.94%. Bank Indonesia Governor Perry Warjiyo emphasized the need for enhanced credit expansion in sectors like trade, agriculture, and business services to adequately support economic financing. Despite the recent slowdown, Bank Indonesia continues to predict overall lending growth will remain within the 8% to 11% range for the year 2025.