Indonesian Rupiah gains as Q3 GDP beats expectations

Indonesia's economy expanded 5.47% year-over-year in the third quarter, surpassing expectations set at 5.18% in a Reuters poll, according to official data released on Thursday. This marked a stronger performance compared to the 5.29% growth experienced in the previous quarter. Southeast Asia's largest economy has faced challenges this year, including reduced investor confidence due to heightened scrutiny of the government's fiscal policies and potential policy changes, as well as concerns about its stock market's future.

Despite these headwinds, growth was bolstered by various sectors such as manufacturing, particularly the palm oil industry which expanded its mandatory biodiesel program. The national budget for 2026 anticipates an economic growth rate of 5.4%, although Finance Minister Suahasil Nazara hinted that this target could be slightly surpassed, reaching 5.5% this year.

The 5.4% to 5.7% range set by Bank Indonesia aligns with the projected growth. Following a recent meeting, the central bank expressed that while the domestic economy remains resilient, additional efforts are necessary to further bolster its growth. President Prabowo Subianto, who assumed office two years ago, has set an ambitious goal of elevating economic growth to 8% by 2029.