EMPIRICAL ANALYSIS OF EAST JAVA’S ECONOMIC PERFORMANCE IN 2025: ECONOMIC GROWTH, INFLATION, UNEMPLOYMENT, AND POVERTY

Abstract

East Java is one of Indonesia’s most strategic provinces due to its large population and diversified economic structure, with manufacturing, trade, and agriculture as the main pillars. In the post-pandemic period, the province is required not only to sustain growth but also to ensure that economic recovery translates into broader welfare improvements. This study aims to empirically assess East Java’s economic performance in 2025 by examining key macroeconomic and welfare indicators—economic growth, inflation, open unemployment, and poverty—while relating them to the province’s sectoral structure and the concept of quality of growth.

This research employs a descriptive-analytical design using document-based secondary data. The analysis relies primarily on official publications from Statistics Indonesia (BPS), Bank Indonesia (BI) provincial economic reports, and relevant provincial government documents, complemented by selective media summaries to enrich policy context. The analytical steps include descriptive trend assessment, comparative reading against national averages (when available), interpretative linkage across indicators, and a qualitative examination of sectoral drivers (manufacturing, trade, agriculture) to understand productivity and inclusiveness dynamics.

The results show that East Java’s economy grew at a relatively stable pace, with year-on-year growth in the first quarter of 2025 reaching around 5.0%, mainly supported by domestic demand—especially household consumption and government expenditure. Inflation remained low at approximately 1.0–1.1%, indicating strong price stability, while the open unemployment rate was about 3.6%, suggesting comparatively favorable labor absorption. However, welfare outcomes still point to structural challenges: the poverty rate in March 2025 was approximately 9.5%, declining from the previous period yet remaining higher than the national average, alongside persisting spatial and socioeconomic disparities.

These findings imply that macroeconomic stability has not fully converted into inclusive welfare gains. The persistence of poverty despite low unemployment indicates potential issues of job quality, informal employment, and limited productivity improvements. Policy recommendations include strengthening inclusive growth through targeted regional development, expanding productive formal employment via skills upgrading and stronger industry–education linkages, and enhancing sectoral integration—especially agriculture–industry linkages through agro-industrialization and local value-chain development—to raise productivity, deepen value-added, and reduce inequality.