Indonesian Rupiah: Stronger growth fails to lift sentiment – MUFG

MUFG reports Indonesia’s Q3 GDP growth beat expectations at 5.47% year-on-year, helped by stronger exports and solid domestic demand. Private consumption and investment remained robust, reducing the urgency for Bank Indonesia to support activity. However, lingering investor confidence issues and weak portfolio flows mean the Indonesian Rupiah is still seen struggling to achieve a sustained recovery.

Growth surprise but FX outlook cautious

"Indonesia’s Q3 GDP growth surprised to the upside, accelerating to 5.47%yoy from 5.29% in Q2, beating the 5.2% consensus."

"Domestic demand is holding up better than expected, with private consumption largely the same at 5.04%yoy and investment expanded 6.06%yoy."

"While stronger growth reduces the urgency for BI to support economic activity, it does little to address lingering investor confidence concerns."

"We remain cautious on IDR, with domestic risks and weak portfolio flows likely to constrain any sustained recovery."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)