Indonesia’s gross domestic product grew by 5.61% year on year in the first quarter. This was above the forecast of 5.3%.
The data points to faster annual growth than expected for the period. No further breakdown was provided in the statement.
The stronger-than-expected GDP growth of 5.61% for the first quarter is a clear bullish signal for Indonesian assets. This figure surpasses consensus forecasts, suggesting the market has underestimated the economy’s underlying momentum. We see this as a reason to position for continued strength in the coming weeks.
We should anticipate the Indonesian Rupiah (IDR) to strengthen against the US dollar. This robust growth gives Bank Indonesia (BI) a strong reason to maintain its hawkish stance, especially after they held rates firm at 6.25% last month. A rate cut is now likely off the table for the second quarter.
For equity derivatives, this data supports a bullish view on the Jakarta Composite Index (JCI). This represents a significant acceleration from the more moderate 4.9% growth we saw in the final quarter of 2025. We would consider buying call options or establishing bull call spreads on major Indonesian equity indices.
This growth will likely add to inflationary pressures, which we’ve already seen with the latest April consumer price index coming in at 3.8%, just above the central bank’s target band. This combination of high growth and firm inflation reinforces our view that BI will prioritize stability. Traders should therefore be wary of positions that bet on falling interest rates.
