Despite Three Shocks, This Foreign Bank is Confident Indonesia's Economy Will Maintain 5% Growth
Global banking giant HSBC expects Indonesia’s economic growth to reach 5.4% throughout 2026. This projection is based on the national economic performance, which successfully recorded an average growth rate of 5.4% during the first half of this year.
However, Frederic Neumann, Chief Asia Economist & Co-head of Global Investment Research Asia at HSBC, projects that Indonesia’s economic growth will slow slightly to 5.2% in 202t7. This figure is still considered very strong amidst the trend of global economic adjustments.
“We expect growth throughout the year to reach 5.4%, and for next year, we project a figure of 5.2%. So, it will slow down slightly, but it remains very strong growth considering the various shocks present,” said Neumann during the HSBC Indonesia Summit 2026 Media Briefing at the St. Regis Hotel on Tuesday (29/9/2026).
Neumann highlighted that the global economy is currently facing various pressures. The three main disturbances include rising energy prices due to war, the El Niño phenomenon which drives up food prices, and the surge in global interest rates.
“If we look at Indonesia, the country is quite vulnerable to these various shocks, and the question now is how strong the Indonesian economy can withstand them? And so far, the conclusion is that the Indonesian economy is very resilient in facing all these shocks,” Neumann asserted.
He also praised how the Indonesian government has responded to the impact of rising global oil prices through subsidy schemes and price controls. In his view, this is vital for national economic stability.
“Thanks to the existence of subsidies and price support, we do not see the full impact on consumers as seen in other countries. So far, the Indonesian government is able to bear the costs of these price controls. In my opinion, that serves as an important anchor for economic stability,” Neumann stated.
In facing food price shocks caused by drought, inflation in Indonesia is currently relatively low compared to the previous El Niño period. Neumann believes this condition is supported by improvements in food distribution systems across Indonesia and Indonesia’s status as a net food exporter.
“Indonesia is a net food exporter. This means Indonesia does not rely too heavily on food imports. While some commodities are imported, overall, Indonesia remains a net food exporter. This also to some extent protects Indonesia from the impacts of El Niño,” he explained.
Regarding high global interest rates, Neumann assessed that businesses in Indonesia are already accustomed to managing interest rate risks. Additionally, the government’s conservative management of debt and budget deficits over many years has prevented the rise in global interest rates from becoming a major impediment to national economic growth.
“That is one of the reasons why we believe that these three shocks will ultimately be absorbed by Indonesia, and the country will continue to demonstrate sufficient resilience,” he concluded.