The Center for Market Education (CME) has been closely following the public debate surrounding Statistics Indonesia’s (BPS) announcement that Indonesia’s economy grew by 5.12% in the second quarter of 2025. While some observers questioned the consistency of the data with other indicators and social realities, CME believes the controversy reveals a deeper problem: our collective overreliance on GDP as the definitive measure of economic well-being.
For decades, GDP growth has been treated as a near-sacred signal of prosperity. This fixation, however, often obscures the reality that GDP is a limited, aggregate figure—one that can diverge significantly from the lived experiences of ordinary people. Positive GDP growth can coexist with stagnant wages, a shrinking middle class, layoffs, or rising costs of living. In such cases, the headline number fails to capture what households actually experience.
Dr. Yohanes Berenika Kadarusman, CME Research Associate and Faculty Member at Universitas Prasetiya Mulya, explained:
“What is needed is transparency and integrity from BPS in producing data that are not only internally consistent (with other BPS figures) but also accurately reflect societal realities and phenomena. The validity and reliability of published data must be safeguarded to prevent doubts and to foster positive expectations.”
Addressing the second issue—the gap between GDP performance and public perception—Dr. Kadarusman stressed:
“In addition to explaining that GDP data reflect objective reality, BPS should also clarify for the public how these figures relate to the realities and phenomena people experience in their daily lives (subjective reality) such as shrinking middle class, layoffs, and other indicators. These subjective aspects must be captured in the published data if it is to remain relevant to the public.”
CME suggests to move beyond fixating GDP growth with genuine progress. CME Chief Economist Alvin Desfiandi (also a Faculty Member at Universitas Prasetiya Mulya) explained:
“GDP is an aggregate figure that includes private consumption, government expenditure, investment, and the net balance of exports and imports. An increase in GDP does not automatically mean the economy is on the right track. For example, if GDP growth results primarily from increased government spending on unproductive projects, financed through deficit spending, we may see positive growth in the short term. However, this will likely lead to inflation, resource misallocation, and—over time—higher unemployment.”
CME Country Manager Indonesia Alfian Banjaransari added that this is not an argument for “degrowth”:
“This does not mean that CME advocates for degrowth. GDP is a useful tool, but it is not a compass. When we elevate it as the main yardstick of progress, we ignore the human dimension of economic life—the resilience of households, the distribution of opportunities, and the sustainability of the growth path itself. From CME’s perspective, the real question is not whether GDP rises, but whether that growth is rooted in sound, market-driven foundations that improve people’s lives over the long term.”
CME stresses that sustainable economic growth—meaning growth whose benefits endure over time, are widely shared across the population, and do not create harmful boom-and-bust cycles—should be assessed through a combination of indicators, including:
- The predominance of private investment, which responds to genuine market needs.
- A healthy household savings ratio, to buffer against economic shocks.
- Fiscal stability through prudent spending and efficient taxation.
