Annual loan growth in Indonesia eased slightly to 7.03% in July 2025, down from 7.77% in June, marking the slowest pace since March 2022. The slowdown reflects weakening purchasing power, a contracting middle class, and increased caution among banks in extending credit. Growth in third-party funds rose by 7% year-on-year, prompting banks to allocate more funds into securities and tighten credit distribution standards. Loan growth moderated across all major categories: consumption loans grew by 8.11%, down from 8.49% in June; investment loans slowed to 12.42% from 12.53%; and working capital loan growth eased to 3.08% from 4.45%. On the demand side, credit growth was largely supported by export-oriented sectors, particularly mining and plantations, as well as the transportation, industry, and social services sectors. Despite the recent deceleration, Bank Indonesia maintains its forecast that overall lending growth will remain within the 8% to 11% range for 2025.