Head of Indonesia’s Statistics Agency (BPS), Amalia Adininggar Widyasanti during a press conference. (prabowosubianto.com)
On November 5, Indonesia’s Statistics Agency (BPS) reported that the country’s gross domestic product (GDP) grew 5.47% year-on-year in the third quarter of 2026. The figure was above the 5.29% recorded in the second quarter and the 5.18% forecast in a Reuters poll.
Household consumption, which makes up 51.97% of GDP, grew 5.04%. Investment rose 6.06% and exports of goods and services rose 4.59%, up from 4.13% in the previous quarter. Government spending grew 8.95%, driven by civil servant pay and the flagship, yet widely criticised, free nutritious meals programme, although this was slower than the nearly 16% in the second quarter.
All sectors expanded, with accommodation and food and beverage services growing fastest at 11.22%. Manufacturing contributed the most to growth at 1.20 percentage points, ahead of trade at 0.94 points and construction at 0.62 points.
BPS Deputy Edy Mahmud said the improved external balance was supported by palm oil exports and more foreign tourists. The government expects 2026 growth of 5.4% to 5.5%, which would be the strongest since 2013. Bank Indonesia projects a range of 4.9% to 5.7%.
Despite the strong macroeconomic data, the stock market still points to weak investor sentiment. The Jakarta Composite Index (IHSG) lost more than 7% in the week to 30 October, after MSCI launched a consultation on 15 October on moving Indonesia from Emerging Market to Standalone Market status. MSCI cited weak transparency and alleged coordinated trading. It has frozen increases to Indonesia’s foreign inclusion factor. A final decision is expected next year. On the other hand, inventories rose sharply, led by unsold cars and motorbikes, which some analysts read as precautionary stockpiling against energy and food supply risks.
For investors, domestic demand remains Indonesia’s economic anchor, which supports consumer, hospitality and retail sectors. State spending is adding demand but has slowed from the second quarter, so companies should not treat it as a constant.
Conversely, strong growth has not seemed to restore market confidence. Foreign investors will watch whether the Financial Services Authority (OJK) and the Indonesia Stock Exchange follow through on reforms such as lowering the ownership disclosure threshold from 5% to 1%, since the MSCI decision will shape foreign inflows. The inventory structure is also a caution, because sectors such as automotive could see weaker orders if stockpiling reverses.
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