Manufacturing, trade, construction, and the information sector served as primary drivers of this expansion. Statistics Indonesia official Moh. Edy Mahmud noted that production increased specifically to satisfy a surge in local consumption, which remains the largest contributor to GDP. Government development programs and increased social mobility further bolstered household spending, shielding the broader economy from the impact of a sustained selloff in domestic assets.
In section Market Quotes
Indonesia Outpaces Growth Forecasts Amid Market Volatility
Indonesia’s economy expanded by 5.47% in the third quarter, significantly outperforming the 5.18% growth projected by analysts. This acceleration from the second quarter’s 5.29% rate highlights the resilience of Southeast Asia’s largest economy, which continues to lean heavily on robust domestic demand to offset external pressures.
This growth persists despite the shadow of a potential MSCI reclassification, which threatens to demote Indonesia to a standalone market due to transparency concerns. Barclays economist Brian Tan remains optimistic, pointing to a narrow fiscal deficit that provides the government with leverage to boost spending through the end of the year. While the rupiah faces ongoing pressure from a hawkish U.S. Federal Reserve and market uncertainty, analysts expect the central bank to intervene via hedging incentives or rate hikes, potentially pushing the policy rate to 6.25% by 2027 to stabilize the currency.
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