HSBC forecasts slower GDP growth next year despite renewed capital inflows
The global bank has forecast that Indonesia's GDP growth will be sustained at a pace of 5.4 percent in 2026 before slowing slightly to 5.2 percent next year.
HSBC, a global banking giant, has forecasted that Indonesia's GDP growth will sustain at 5.4 percent in 2026 and slow slightly to 5.2 percent in the following year. Despite facing persistent global headwinds, the country's resilience and renewed capital inflows have allowed HSBC to maintain this optimistic projection. According to Frederic Neumann, HSBC's chief Asia economist and co-head of global investment research Asia, the first half of the year saw the economy growing at a rate of 5.4 percent, with the full year also expected to reach the same pace.
However, next year, HSBC anticipates a modest deceleration to 5.2 percent. Neumann emphasized that Indonesia's strong position to absorb external shocks, such as rising energy costs due to the Iran war, is largely due to the government's effective price controls that cushion consumers from the impact of the energy crisis. The country's well-functioning food distribution system and role as a net food exporter have also helped keep food inflation relatively low, despite the looming threats from this year's powerful El Nino.
Neumann suggested that rising global interest rates would not significantly hinder Indonesia's economy, as the rupiah remains relatively stable, and the banking industry continues to record accelerating loan growth. Furthermore, HSBC expects the budget deficit to fall well under the 3 percent legal cap for next year, which would reassure foreign investors.
Written by urgent.news from The Jakarta Post's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
