Indonesian Rupiah: Stronger growth fails to lift sentiment – MUFG
MUFG reports Indonesia’s Q3 GDP growth beat expectations at 5.47% year-on-year, helped by stronger exports and solid domestic demand. Private consumption and investment remained robust, reducing the urgency for Bank Indonesia to support activity. However, lingering investor confidence issues and weak portfolio flows mean the Indonesian Rupiah is still seen struggling to achieve a sustained…
Indonesia's third quarter GDP growth exceeded expectations at 5.47% year-on-year, buoyed by stronger exports and solid domestic demand. Private consumption and investment continued to outperform, decreasing the need for Bank Indonesia to stimulate the economy. However, lingering concerns over investor confidence and weak portfolio flows keep the Indonesian Rupiah from achieving a sustainable recovery.
Indonesia's Q3 GDP growth surpassed forecasts, climbing to 5.47% year-over-year from 5.29% in Q2, exceeding the 5.2% consensus. Domestic demand is outperforming expectations, with private consumption remaining steady at 5.04% year-over-year and investment rising 6.06% year-over-year. Although improved growth lessens the need for Bank Indonesia to support economic activity, it does little to tackle persistent investor confidence issues.
We remain cautious on the Indonesian Rupiah, as domestic risks and weak portfolio flows are likely to hinder any sustained recovery.
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