Indonesia’s economy outpaces forecasts with robust growth

Strong GDP performance in the fourth quarter

Indonesia’s economy continued to outperform expectations in the final quarter of 2025, with gross domestic product expanding by approximately 5.39 % year-on-year, surpassing market forecasts and reaffirming the country’s position as one of Asia’s most resilient emerging markets. Despite persistent global headwinds and commodity market volatility, the economic expansion in the fourth quarter highlighted the strength of domestic drivers and diversified economic activity.

Key drivers of economic momentum

Domestic demand remains a central pillar of Indonesia’s growth story. Household consumption, supported by rising incomes and fiscal support, continues to propel economic activity. Public investment in infrastructure and other strategic sectors bolsters industrial output, while business investment contributes to employment and productivity gains. Exports, particularly in manufacturing and agricultural commodities, have also supported economic resilience, even as global trade growth moderates.

Monetary policy and inflation environment

Indonesia’s macroeconomic framework reflects a careful balance between supporting growth and maintaining price stability. Monetary policy decisions aim to manage inflation within a moderate range, while ensuring that interest rate settings and exchange rate dynamics support sustained economic confidence. This approach helps attract foreign direct investment and sustains private sector engagement in key growth sectors.

Regional comparisons and competitiveness

Indonesia’s growth trajectory remains among the strongest in Southeast Asia and the G20, underscoring its competitive economic fundamentals. Outpacing many peers in annual growth rates, Indonesia is viewed as a compelling case for investors seeking exposure to dynamic emerging economies with robust consumption and investment profiles.

Outlook for 2026 and beyond

Looking ahead, policymakers have set ambitious targets for 2026 growth, focusing on leveraging domestic demand, export diversification, and technological adoption. While external risks such as slowing global demand and commodity price fluctuations persist, Indonesia’s economic strategy emphasizes resilience and long-term structural reforms to sustain growth momentum.

As reported by experts at International Investment, Indonesia’s ability to exceed growth expectations in the fourth quarter reflects fundamental economic resilience, a favourable investment climate, and strong domestic demand, reinforcing the country’s appeal as a key emerging market with sustainable prospects for future expansion.