KUALA LUMPUR: Indonesia’s economy expanded 5.47% year-on-year in the third quarter of 2026, beating market expectations as strong manufacturing and downstream palm oil processing bolstered Southeast Asia’s largest economy.
Official data released today showed gross domestic product (GDP) growth outpaced the 5.18% projected in a Reuters poll and accelerated from the 5.29% pace recorded in the second quarter.
According to the Central Statistics Bureau, the expansion was anchored by resilient manufacturing activity. Growth received a notable boost from the palm oil refining sector, driven by the nationwide roll-out and expansion of the government's mandatory biodiesel mandate.
The stronger-than-expected print provides a welcome cushion against softening foreign investor sentiment. Throughout 2026, markets have kept a wary eye on Jakarta amid persistent scrutiny over the administration’s fiscal trajectory, broader economic policymaking, and lingering downgrade risks across domestic equities.
The third-quarter performance keeps Indonesia comfortably on track to meet its 2026 state budget growth target of 5.4%.
Finance Minister Suahasil Nazara recently noted that full-year growth could nudge higher to 5.5%. The trajectory also aligns with Bank Indonesia’s projection band of 4.9% to 5.7%, though the central bank reiterated last month that domestic activity still requires sustained reinforcement, according to CNA.
The robust quarterly result offers momentum for President Prabowo Subianto, who assumed office in October 2024.
Prabowo has pledged to accelerate annual economic expansion to 8% by 2029 through an aggressive agenda centred on industrial downstreaming, enhanced food and energy security, and large-scale domestic infrastructure development.