Indonesia’s economic growth likely moderated in Q3: Reuters poll

By Veronica Dudei Maia Khongwir

BENGALURU (Reuters) – Indonesia’s economy likely grew 5.05% last quarter from a year earlier, supported by fiscal spending and a larger trade surplus, a Reuters poll of 21 economists found.

On a quarter-on-quarter basis, the economy was expected to have grown 1.71% in the July-September period, according to a smaller sample in the Oct. 25-Nov. 2 Reuters poll.

Domestic consumption in Southeast Asia’s largest economy received a boost from fiscal spending and “pro-growth” policies by the central bank to encourage credit expansion and investment.

Also, a higher-than-expected trade surplus in September as imports fell faster than exports also supported the economy to grow at a moderate pace.

The poll median for 5.05% growth in the third quarter from a year earlier was slower than the 5.17% expansion in the preceding quarter. The latest data will be released on Nov. 6.

Bank Indonesia raised its benchmark seven-day reverse repurchase rate by 25 basis points to a pre-pandemic level of 6.00% on Oct. 19 to stabilise the rupiah.

“Finding the optimal balance between weaker rupiah and higher rates is not an easy task. Psychologically, there is an inclination for Indonesian policymakers and businesspeople to fear a weaker rupiah more,” said Barra Kukuh Mamia, senior economist at Bank Central Asia.

“But we suspect that, at current conditions, a weaker rupiah is not necessarily deleterious for growth and might have some advantages, as long as the pace of depreciation remains slow enough.”

Indonesia’s GDP growth was expected to average 5.0% this year – within Bank Indonesia’s estimate of 4.5% to 5.3% – and in 2024, a separate Reuters survey showed.

(Reporting and polling by Veronica Dudei Maia Khongwir; Editing by Lisa Shumaker)