India has emerged as Indonesia’s third-largest export destination in Q2 2025, overtaking Japan amid a major realignment in global trade flows, according to the latest Country Insights Report released by Rubix Data Sciences. The development comes as Indonesia recalibrates its economic strategy in response to softening global demand and new trade barriers, including a 19% tariff imposed by the United States.
Indonesia’s GDP expanded by 5.12% in Q2 CY2025—its fastest in two years—before easing to 5.04% in Q3. While the government aims for 5.3% growth for the full year, moderating household spending and slower exports pose challenges. Despite this, the IMF projects stable medium-term growth of around 5% annually through 2027, signalling strong fundamentals.
The report notes significant shifts in Indonesia’s trade composition in early FY2025. Imports rose faster than exports due to strong domestic demand for capital goods. China maintained its lead as Indonesia’s top trading partner, while India’s growing share reflects strengthening commercial ties, even as overall bilateral trade declined from USD 38.8 billion in FY2023 to USD 28.2 billion in FY2025. India’s imports from Indonesia fell 11% annually, driven by reduced coal purchases and evolving palm oil policies, while India’s exports halved over two years.
To bolster resilience, Indonesia is accelerating reforms including a 75% reduction in minimum paid-up capital for foreign companies and the creation of six new Special Economic Zones, including its first Halal Hub. The recent EU–Indonesia CEPA will soon eliminate tariffs on 98% of trade lines.
Investments in digital transformation are also rising, led by Indonesia’s National AI Roadmap (2025–2045), which aims to produce 100,000 AI professionals annually.
Rubix CEO Mohan Ramaswamy said Indonesia’s policy reforms and diversification efforts are positioning it for more balanced and future-ready growth despite external pressures.