A decoupling of the market and the real sector?

INDONESIA - Report 10 Feb 2026 by Cyrillus Harinowo

The Indonesian economy seemed to be experiencing a kind of decoupling between the financial markets and the real sector. The market was very much affected by the warning by MSCI about the country's stock market and the lowering of the Indonesia's sovereign outlook by Moody's. However, real sector data showed that the Indonesian economy remained robust. Most probably this is due to the difference in timing: the market reflected the events of February 2026, while the real sector reflected what was happening in the last quarter of 2025.

The Indonesian economy posted better-than-expected results for Q4 2025, with GDP growth of 5.39%, above the 5.04% annual growth for Q3 2025. Compared to the previous quarter, the Indonesian economy expanded by 0.86%, following the regular cycle. With the Q4 growth rate above 5%, overall economic growth full-year 2025 was 5.11%—slightly above the rate of growth for 2024 of 5.03%.

The fastest sector of growth in Q4 2025 was transportation and storage, at 8.98% Y/Y, followed by "other services", which grew by 8.71%. On the expenditure side, capital formation rose the fastest, jumping by 6.12%.

The Central Board of Statistics also released the balance of trade data for December 2025. Exports were up by 16.99% M/M, reaching $26,346.8 million, with non-oil exports up 15.93% to $25,086.7 million. At the same time, imports also increased, by 20.02%, to $23,834.1 million, resulting in a trade surplus of $2,512.7 million, another large surplus, although slightly lower than the previous month.

For the month of January 2026 deflation was reported at 0.15%. With that performance, Y/Y inflation stood at 3.55%, above the target corridor of the Central Bank.

At its most recent meeting, held on January 20-21, Bank Indonesia decided to keep the benchmark interest rate constant at 4.75%. This is aimed to strengthen economic growth and maintain stability. The Bank also committed to managing inflation within the 2.5% ±1% target for 2026.

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