HSBC forecasts Indonesia’s GDP growth to decelerate to 4.7% in 2026 amid energy shocks and weak capital inflows.
Indonesia’s economic growth is showing signs of slowing as rising energy costs weigh on activity and external balances. Retail spending, consumer sentiment, and export orders have declined, while fiscal frontloading may tighten spending later in the year to meet a 3% deficit cap.
HSBC projects GDP growth will ease to 4.7% in 2026 from 5.1% in 2025, with inflation rising to 3.5% from 1.9%. Persistent macro challenges include a negative output gap, subdued investment, and weak capital inflows, which fell to -0.3% of GDP in 2025.
The Indonesian rupiah’s depreciation reflects balance of payments pressures, with a second consecutive annual deficit expected in 2026. While the current account shortfall remains modest at -0.1% of GDP, capital outflows pose a larger concern.