East Java's economy grew by 5.03% year-on-year (YoY) in Q4 2024, contributing 25.55% of Java Island’s Gross Regional Domestic Product (GRDP), making it the second-largest regional economy after Jakarta, according to Dudung Rudi Hendratna, Head of the East Java Representative Office of the Ministry of Finance. The strong economic performance was driven by domestic demand, controlled inflation, and job creation, with key contributions from downstream industries such as food and beverage (7.55% YoY), paper (5.96% YoY), and chemicals (5.26% YoY). Additionally, micro and small business financing played a vital role, with Kredit Usaha Rakyat (KUR) disbursements reaching IDR 46.62 trillion for 909,119 recipients and Usaha Mikro (UMi) loans totaling IDR 1.18 trillion for 264,341 recipients. Meanwhile, deflation of -0.03% in February 2025 was recorded, largely due to government efforts to control food prices ahead of Ramadan and Lebaran.
According to Joko Budi Santoso, Senior Researcher at the Center for Economic Policy Studies at Universitas Brawijaya, East Java’s economy mirrors Indonesia’s overall economic structure, with agriculture, industry, and services as its backbone. Unlike Jakarta, which relies heavily on the service sector, East Java is supported by over 9 million MSMEs, which account for 60% of the region’s economy. With the largest KUR disbursement in Indonesia, MSMEs in East Java have significant growth potential. However, provincial and local governments must enhance market access and streamline licensing to accelerate business development. Strengthening MSMEs could also help reduce unemployment, currently at 1 million, and improve economic inclusion for East Java’s 3.9 million lower-income residents.
