Indonesia: Headline GDP strength, mixed momentum – Societe Generale
Societe Generale economist Kunal Kundu notes Indonesia’s 2Q26 Gross Domestic Product (GDP) grew 5.3% year-on-year, beating the bank’s 5.1% forecast, but warns the composition is less reassuring.
Indonesia's Gross Domestic Product (GDP) growth for the second quarter of 2026 exceeded expectations at 5.3% year-on-year, surpassing the 5.1% forecast by Societe Generale economist Kunal Kundu. However, Kundu warns that the composition of the data raises concerns about the quality of the growth. Public spending played a significant role in the expansion, while private consumption and manufacturing remained weak.
Investment also grew, but it led to an increase in imports. A substantial statistical discrepancy complicates the evaluation of Indonesia's growth quality.
Kundu notes that non-government GDP growth has remained stagnant, emphasizing that the headline number may not accurately reflect the underlying economic momentum. He highlights that growth driven by public spending differs qualitatively from growth fueled by private demand, weakening the argument for interpreting the GDP data as evidence of a consumer-led recovery. The article concludes by stressing that while Indonesia's economy continues to grow, the quality, breadth, and reliability of that growth remain uncertain.
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