Indonesia's Economic Growth Beats Expectations

By Ying Xian Wong

Indonesia's economic growth beat expectations in the third quarter, supported by strong domestic demand.

Southeast Asia's largest economy expanded 5.47% from a year earlier, accelerating from 5.29% growth in the second quarter, data from the country's statistics agency showed Thursday.

That beat the median estimate of 5.18% growth in a Wall Street Journal poll of seven economists.

The stronger growth came despite heightened market volatility, with Indonesia facing external pressures from ongoing Middle East tensions and a selloff in domestic assets. The selloff a recent warning from MSCI that it could reclassify Indonesia as a standalone market, citing insufficient progress in addressing concerns over market transparency and investability.

The rupiah has also weakened against the dollar amid pressure on domestic financial markets and a hawkish U.S. Federal Reserve stance.

The market turmoil could have broader economic implications if it leads businesses and investors to delay or scale back investments.

A downgrade from MSCI to standalone market status could create a second-order drag on Indonesia's 2027 growth by dampening investor sentiment and slowing foreign and domestic investment, RHB economists Barnabas Gan and Wong Xian Yong said in a recent note.

Under RHB's stress-test scenario, a 25% decline in the Jakarta Composite Index in the second half of 2027 following an MSCI downgrade could shave about 0.6 percentage point off full-year GDP growth, lowering its forecast to 4.5% from 5.1%.

Write to Ying Xian Wong at yingxian.wong@wsj.com

(END) Dow Jones Newswires

November 04, 2026 23:37 ET (04:37 GMT)