Indonesia: Policy support underpins growth outlook – Standard Chartered

Indonesia’s GDP growth accelerated to 5.5% year-on-year in Q3 from 5.2% in Q2, with household consumption, investment and exports driving the expansion, according to Standard Chartered’s Aldian Taloputra. Despite higher oil prices, energy subsidies and social spending supported consumers’ purchasing power. While retaining its 2026 GDP growth forecast of 5.3%, the bank sees upside risks given robust year-to-date growth and resilient household spending.

Policy support sustains strong growth

"Indonesia’s GDP grew 5.5% y/y in Q3 (vs 5.2% in Q2), beating our and consensus expectations, led by relatively steady household consumption, investment and exports."

"Broadly unchanged energy prices supported by subsidies and social spending helped sustain household consumption growth above 5.0% y/y in Q3, despite higher food and imported inflation."

"We maintain our 2026 GDP growth forecast of 5.3%, with upside risk given the strong growth rebound (5.5% YTD) and resilient household spending."

"However, we expect cautious business sentiment and a weak formal-sector recovery will likely continue to weigh on growth in the near term, especially as narrowing fiscal buffers constrain support for household purchasing power."

"That said, the government has planned around IDR 31tn in year-end stimulus, largely through food assistance and wage subsidies, which should provide some support to household consumption in Q4-2026."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)