Indonesia: Macro resilience, market strain Explaining the recent policy pivot

Research evidence excerpt

Indonesia: Macro resilience, market strain Explaining the recent policy pivot

11 June 2026

Indonesia: Macro resilience, Economics Indonesia

market strain

Explaining the recent policy pivot

◆ Overall macro is resilient, though the energy shock has Pranjul Bhandari

started to show up in recent growth, inflation and trade prints ChiefThe HongkongIndia Economist/Strategist,and Shanghai BankingASEANCorporationEconomist

Limited, Singapore Branch

◆ Sticky BoP deficit is the key problem; a weak IDR hasn’t pranjul.bhandari@hsbc.com.sg

+65 6658 4976

delivered on ‘expenditure switching’, so demand compression

Aayushi Chaudhary

may be needed Economist, India, Indonesia & Sri Lanka HSBC Securities and Capital Markets (India) Private

Limited

◆ Recent policy pivot to higher yields means further hikes; we aayushi.chaudhary@hsbc.co.in

+91 22 2268 5543

expect a 25bp rate hike next week, and more steps to follow

Priya Mehrishi

Associate Economist

HSBC Securities and Capital Markets (India) Private

Indonesia has been in the spotlight as its equities, bonds and FX have Limited

underperformed the broader EM index, even though headline macro data still looks priya.mehrishi@hsbc.co.in

+91 97391 69567

resilient. GDP rose 5.6% in the quarter ending March, above 5.1% in 2025, and

inflation remains within the 2.5–3.5% target range.

But a deeper look suggests the economy is gradually reflecting the energy shock,

and markets may be pricing that in. Recent readings point to weaker retail spending,

softer consumer sentiment and falling export orders, while significant frontloading of

fiscal expenditure implies belts may need to be tightened to honour the 3% fiscal cap.

Cost pressures are also building, with PMI input prices rising quickly and feeding into

output prices.