Bali Q2 2025 Economic Report
Bali’s economy continued its resilient recovery in the second quarter of 2025, marked by sustained growth in tourism, moderated expansion in real estate, and enduring structural challenges in agriculture and waste management. Although official GDP data for Q2 has yet to be released, preliminary indicators from the Bali Statistics Agency (BPS), air traffic logs, hospitality industry surveys, and key real estate insights reflect a stable economic trajectory, building on Q1’s 5.52% year-on-year growth.
This quarter, we also observed emerging patterns in local entrepreneurship, sustainability initiatives, and the digital economy. These factors, although less quantifiable in traditional macroeconomic terms, are influencing Bali’s development trajectory by encouraging innovation, attracting younger demographics, and pushing institutions to adapt.
Key Highlights:
- Tourism: International arrivals are climbing steadily, reaffirming Bali’s global tourism stature and contributing to local service sector expansion.
- Real Estate: Demand remains robust, especially for residential hospitality units, but oversupply in commercial segments is compressing yields.
- Agriculture: Rising input costs continue to impact profitability despite stable production volumes; diversification and cooperative models are being explored.
- Recycling: Environmental reforms are gaining ground, though infrastructure and enforcement gaps present barriers to scale.
Sectoral Analysis
Tourism
International Arrivals: Projections for 2025 estimate 14.6–16 million international visitors to Indonesia, with Bali expected to capture a significant share. Building on 6.3 million arrivals in 2024, the island is on track to exceed 6.5 million this year, driven by targeted marketing, relaxed visa policies, and increased international flight frequencies.
Quarterly Performance: Q1 data showed 1.5–1.7 million arrivals in Bali, translating to a 4–8% increase year-on-year. March alone saw 470,851 arrivals, a 4.5% month-on-month increase, based on Ngurah Rai Airport data confirmed by BPS and the Ministry of Tourism. The consistent growth in arrivals through Q2 suggests a healthy recovery trajectory that is surpassing some pre-pandemic benchmarks.
Accommodation Patterns: Despite the rise in arrivals, hotel occupancy dropped by 3.4 percentage points while average daily rates (ADR) rose. This divergence signals a shift toward alternative accommodations such as boutique villas and short-term rentals, particularly in locations like Uluwatu, Canggu, and Ubud, where co-living and work-from-paradise lifestyles are flourishing.
Economic Spillovers: Growth in the tourism sector is generating indirect economic benefits, including increased demand for transportation, wellness services, food and beverage, and retail experiences. The service sector is experiencing strong hiring trends, although talent shortages in hospitality management and digital marketing remain a concern.
Real Estate
Market Conditions: Commercial property development continues to outpace tourism growth, raising concerns about long-term market saturation. This trend introduces risks such as elevated vacancy rates, decreasing rental yields, and heightened competition, urging investors and developers to conduct detailed feasibility assessments before entering new projects.
Market Indicators: The commercial property index eased from 15.09% (Q3 2024) to 14.61%, signaling moderated growth. In contrast, villa and co-living segments maintained strong momentum in Q2, with continued interest from digital nomads, long-stay expatriates, and Indonesian urban professionals relocating for lifestyle benefits.
Investment Takeaways: Submarkets like Pererenan, Canggu, and Bingin showed villa occupancy rates between 70–90%, averaging around 75%. These figures reaffirm demand for mid- to high-end residential hospitality offerings. Infrastructure improvements, particularly in broadband and road access, are also reshaping property valuations in once-rural zones.
Regulatory Context: The provincial government is reviewing zoning adjustments and environmental permitting rules, which could affect coastal developments. Investors should monitor these policy changes closely.
Agriculture
Economic Conditions: The Farmer Terms of Trade Index (NTUP) averaged 108.5 in Q2, down slightly from 109.1 in Q1, reflecting tightening profit margins due to rising input costs, including fertilizers, transportation, and labor. These cost pressures continue to affect smallholder farmers disproportionately.
Commodity Developments: While rice yields held stable, price fluctuations in global coffee and cocoa markets affected export earnings and revenue stability. Climate variability also contributed to uneven production cycles.
Innovation and Diversification: There is growing interest in transitioning to agroforestry models, permaculture systems, and regenerative farming practices. Pilot programs in Gianyar and Tabanan are receiving limited public funding, while private investors are showing interest in eco-certified organic output. Farmer cooperatives are gaining traction as a means to improve scale, bargaining power, and logistics.
Recycling & Waste Management
Policy Milestone: In April 2025, Bali officially enforced a ban on single-use plastic bottles under one liter, signaling a firmer environmental commitment. The policy, spearheaded by the provincial government, aligns with broader efforts to position Bali as a green tourism hub.
Infrastructure and Adoption: Businesses are gradually adopting refillable packaging systems, especially in hospitality and retail sectors. Local governments have increased public education campaigns and pilot neighborhood recycling programs. Despite these gains, the recycling rate remains below 10%, and plastic leakage into marine ecosystems is still a major concern.
Private Sector Opportunities: New ventures in waste-to-energy, composting, and reverse logistics for reusable goods are gaining traction. Grant funding and blended financing opportunities are increasingly available from international development agencies and ESG-focused investors.
Bali Economic Report Comparative Analysis: Q2 vs. Q1 2025
| Sector | Q1 2025 Highlights | Q2 2025 Developments |
|---|---|---|
| Tourism | 1.5–1.7M arrivals (+4–8% YoY) | March arrivals +4.5% MoM; ADR up; hotel occupancy down |
| Real Estate | Oversupply in commercial segment | Stable demand in villas; average occupancy ~75% |
| Agriculture | NTUP ~109.1 | NTUP ~108.5; margin pressure from input cost increases |
| Recycling | Plastic ban announced | Ban in effect; adoption varies; infrastructure development ongoing |
Strategic Outlook: Q3 and Beyond
- Tourism: The sector is expected to continue its upward trajectory, supported by new air routes, streamlined digital visas, and promotional campaigns targeting wellness and long-stay tourism. Key risks include geopolitical shifts affecting traveler confidence and foreign exchange fluctuations.
- Real Estate: Developers should cautiously monitor absorption rates and remain agile in adjusting to market shifts. Mixed-use developments, sustainable architecture, and co-living concepts will likely outperform traditional commercial builds.
- Agriculture: Strategic interventions—such as input subsidies, land reform pilots, and data-driven farming practices—could help buffer farmer incomes and improve productivity. Agritech adoption remains slow but promising.
- Sustainability: Stakeholders should pursue collaborative models linking government, NGOs, and private enterprises to enhance recycling ecosystems. Investments in logistics infrastructure and behavioral change campaigns are essential.
Final Remarks
This expanded Bali Economic Report integrates Q1 economic baselines with robust Q2 sectoral updates and early strategic signals from the third quarter. While GDP data and in-depth sectoral disaggregation are pending release by BPS, the indicators observed thus far suggest a cautiously optimistic economic outlook. Policymakers, business leaders, and investors should remain attentive to structural shifts and align their strategies with Bali’s evolving development path.
Explore Opportunities with Hepta Solutions
Navigating Bali’s complex economic landscape requires the right insights and strategic partners. Hepta Solutions is your trusted advisor for investment support, market entry, regulatory compliance, and sustainable business development in Indonesia. Whether you’re exploring tourism ventures, property development, or eco-initiatives, our team of local experts and international consultants is ready to guide you from vision to execution.
📩 Contact us today at www.heptasolutions.com/contact to schedule a consultation or learn more about how we can support your success in Bali and beyond. integrates Q1 Bali economic baselines with robust Q2 sectoral updates and early strategic signals from the third quarter. While GDP data and in-depth sectoral disaggregation are pending release by BPS, the indicators observed thus far suggest a cautiously optimistic economic outlook. Policymakers, business leaders, and investors should remain attentive to structural shifts and align their strategies with Bali’s evolving development path.