By Rahul Trivedi
BENGALURU (Reuters) -Indonesia’s economy likely grew at a steady annual pace of 5.00% in the third quarter, supported by household spending and investment, while exports got a temporary boost from firms shipping goods ahead of U.S. tariffs, a Reuters poll showed.
The October 27-November 3 poll of 22 economists estimated that Southeast Asia’s largest economy expanded 5.00% in the July–September quarter on an annual basis, slightly below the 5.12% growth recorded in April-June.
On a quarterly basis, gross domestic product (GDP) growth was projected to have eased to 1.40% from 4.04%. The official data will be released on Wednesday.
“Investment and consumption driven by policy support is really the name of the game in Q3,” said Adam Ahmad Samdin, an economist at Oxford Economics.
“Retail sales have been holding up fairly well relative to recent history. It’s quite likely this was supported by policy stimulus. Other indicators of consumer spending that focus on big-ticket items like cars or motorcycles still haven’t really been performing very well.”
Retail sales rose 4.7% in July and 3.5% in August, well above the 1.0% average increase in the second quarter.
A 24.44 trillion rupiah ($1.5 billion) government fiscal stimulus package introduced in June, which included cash handouts and transport subsidies, also helped.
Jeemin Bang, associate economist at Moody’s Analytics, said: “The economy would see more benefit if fiscal policy tackled structural challenges such as youth unemployment and insufficient real wage growth.”
Net exports also contributed to growth as companies rushed to ship goods to the United States before a 19% tariff took effect on August 7, while imports dropped in July and August before rebounding in September.
“Goods exports continued to benefit from front-loaded shipments, while import growth was modest. Overall, we expect a slight let-up in domestic engines in the quarter, while trade likely held the fort,” said Radhika Rao, executive director and senior economist at DBS Bank.
The economy will grow 4.9% in 2025 and around 5.0% in the following two years, a separate Reuters survey showed, broadly maintaining the pace seen since 2022. But challenges remain for the $1.4 trillion economy.
Moody’s Bang cautioned domestic demand was softening and exports faced headwinds from China’s uneven recovery.
That was despite Bank Indonesia cutting interest rates by a cumulative 150 basis points since September 2024. The central bank is expected to trim another 50 basis points by end-March 2026.
($1 = 16,665 rupiah)
(Reporting by Rahul Trivedi; Polling by Pranoy Krishna; Editing by Conor Humphries)
