Indonesia’s economy grew faster than expected in the third quarter, expanding 5.47% from a year earlier as strong household spending and factory output offset turbulence in financial markets. The result, released by Statistics Indonesia (BPS) on Thursday, accelerated from 5.29% growth in the second quarter and beat the median forecast of 5.18% in a Wall Street Journal poll of economists.
From the previous quarter, the economy expanded 1.59%. At current prices, gross domestic product reached 6,741 trillion rupiah, BPS said, with growth over the first nine months of the year averaging 5.45%.
Household consumption was the main engine. Spending by households grew 5.04% from a year earlier, remaining the largest contributor to growth, supported by increased mobility and the government’s priority development programmes. Investment and government spending were the next largest contributors on the expenditure side.
On the production side, manufacturing, trade, construction and information and communication were the main contributors, BPS official Moh. Edy Mahmud said, with factories raising output to meet stronger domestic demand.
The stronger reading came despite a difficult backdrop. Indonesia has faced pressure from the prolonged conflict in the Middle East and a sell-off in domestic assets after index provider MSCI warned it could reclassify the country as a standalone market, citing insufficient progress on market transparency and investability.
The result keeps growth close to the government’s ambitions. The 2026 state budget projects growth of 5.4%, and Finance Minister Suahasil Nazara has said it could reach around 5.5% this year, within Bank Indonesia’s outlook range of 4.9% to 5.7%. President Prabowo Subianto has set a longer-term goal of lifting growth to 8% by 2029.
Barclays kept its forecast for growth at 5.4% in both 2026 and 2027, seeing slightly more upside than downside risk. The bank noted a narrower-than-expected fiscal deficit in the first nine months, which it said gives the government room to raise spending in the fourth quarter, though it expects Bank Indonesia to lift its policy rate twice in 2027 as the rupiah faces continued pressure.
Sources: Dow Jones Newswires (via Morningstar) — “Indonesia’s Economic Growth Beats Expectations — Update” (https://www.morningstar.com/news/dow-jones/20261105206/indonesias-economic-growth-beats-expectations-update); Statistics Indonesia (BPS) third-quarter GDP release, 5 November 2026.
