06/05/2026

BIZ & FINANCE WEDNESDAY | MAY 6, 2026

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Indonesia economy grows 5.6% in Q1 o Household expenditure is biggest contributor, says statistics agency

Jakarta’s insistence on maintaining the fuel subsidy was feeding fears the government may decide to exceed its 3% fiscal deficit ceiling, said Leather, further undermining confidence in the rupiah. In a statement, the central bank said yesterday it would “continue to be present in the market... to maintain the stability of the rupiah’s exchange rate in line with its fundamental value”. On Monday, BPS said year-on-year inflation for April came in at 2.42%, the lowest so far this year. The World Bank last month lowered Indonesia’s 2026 growth projection to 4.7% from the 4.8% it had forecast last October. – AFP Thailand to borrow US$12b as Middle East crisis bites BANGKOK: Thailand approved a US$12.2 billion emergency borrowing package yesterday to cushion the economic impacts of the Middle East war, marking one of the country’s largest borrowing plans in decades. The cabinet said the funding would be used to boost domestic spending and ease economic hardships as inflation rises and growth slows, with the finance ministry last week cutting its GDP growth forecast to 1.6%, from 2.4% last year. The loan of about 400 billion baht will be deployed from June to September, and include aid for more than 20 million low-income people under the government’s“Thais Helps Thais” scheme to ease living costs. It will also be used to support alternative energy, Finance Minister Ekniti Nitithanprapas said at a news conference after a cabinet meeting. The US-Israel war against Iran that began in late February has roiled global energy prices, resulting in rising prices for oil and gas, shipping and consumer goods. Prime Minister Anutin Charnvirakul called the loan “a tool to move the country forward and prevent economic weakening”. “We will get through this crisis together,“ he told reporters. The borrowed sum is among the highest in recent history, but below levels seen during the 1997 Asian financial crisis and the Covid-19 pandemic years. Public debt stood at 66.38% of the country’s GDP in March, below the 70% ceiling, and the new loans will not breach the limit, the finance minister said. Thailand’s core inflation was forecast to hit 3% this year, up from an earlier estimate of 0.3%. – AFP

Jakarta has since made an oil deal with Russia and is looking at other alternatives in Africa, the United States and Venezuela. Every dollar increase in the global oil price adds a burden of about 6.8 billion rupiah (RM1.5 billion) to the state budget. Jakarta’s 2026 fuel subsidy calculation had been premised on a global oil price of US$70 per barrel – which was pushed past US$100 a barrel by the US-Israeli war on Iran and Tehran’s response. The subsidy was also based on an exchange rate of 16,500 rupiah to the dollar, but the currency has since slipped beyond the 17,400 rupiah mark.

JAKARTA: Indonesia’s economy grew 5.6% year-on-year in the first quarter of 2026, the national statistics agency said yesterday, topping the government’s own forecast despite pressures of the Middle East war. The reading exceeded the 5.4% recorded in the final three months of 2025, Statistics Indonesia (BPS) head Amalia Adininggar Widyasanti told reporters in Jakarta. Household expenditure was the biggest contributor to the growth, Amalia added. The government of President

policymaking” and its willingness under Prabowo to “undermine the guardrails of macro orthodoxy”. Last month, Economy Minister Airlangga Hartarto said Indonesia could outlast the impacts of Middle East war-fuelled oil price hikes for up to 10 months without cutting fuel subsidies. Indonesia is an oil producer but nevertheless a net importer, and heavily subsidises fuel consumed domestically. Between a fifth and a quarter of its oil came from the Middle East, but

Prabowo Subianto is aiming to raise the Southeast Asian economy’s growth rate from 5.1% last year to 8% by 2029, powered by high public spending. Amalia said government expenditure grew more than 21% in the first quarter compared to a year earlier. Capital Economics senior Asia economist Gareth Leather cautioned in a statement against reading the latest figure at face value due to the government’s “shift towards more populist and interventionist

HSBC first-quarter pre-tax profit falls to US$9.4 billion HONG KONG: HSBC said yesterday that pre-tax profit fell to US$9.4 billion in the first quarter, missing expectations, as it was hit by credit losses from United Kingdom fraud linked issues and the Middle East crisis. The 1.1% on-year drop meant the lender came up short of the US$9.6 billion it had forecast for the first three months of the year. impairment charges in 1Q 26, an adverse impact from notable items and a rise in operating expenses,“ HSBC said in a statement. The bank’s expected credit losses surged to US$1.3 billion, primarily reflected in a US$400 million “fraud-related, secondary, securitisation exposure with a financial sponsor in the UK”, it said. “heightened uncertainty and a deterioration in the forward economic outlook” caused by the Iran war. The company’s Hong Kong-listed shares fell more than four percent in afternoon trade. rising unemployment and market disruption. Despite the fall, the bank said “we remain confident in achieving the targets we set out”. “The group is well positioned to manage the changes and

The bank forecast “a mid-to-high single-digit percentage adverse impact on profit before tax” from a range of issues including higher oil prices, rising inflation, a material slowdown in gross domestic product,

uncertainties prevalent within the global environment in which we operate, including in relation to the conflict in the Middle East,“ it added. – AFP

It added that a US$300 million increase in allowances reflected

“The decrease reflected higher expected credit losses and other credit

The logos of HSBC, DBS and Standard Chartered are seen on buildings in the Marina Bay financial centre in Singapore yesterday. – AFPPIC

Australia hikes key interest rate citing higher fuel prices SYDNEY: Australia’s central bank hiked its key interest rate yesterday, citing soaring fuel prices that are stoking inflation. pressure stemming from turmoil in the Middle East. this is likely to have second-round effects on prices for goods and services more broadly.”

“There are early signs that many firms experiencing cost pressures are looking to increase prices of their goods and services,“ the bank said. Figures released last week showed inflation at 4.6% in Australia, the highest it has been since late 2023. – AFP

access to the Strait of Hormuz, through which a fifth of global oil and gas usually passes. Many economists have warned that a protracted war could fuel an inflation shock similar to that seen after Russia’s 2022 invasion of Ukraine.

“As expected, developments in the Middle East are having an impact on inflation,“ the bank said in a statement. “Higher fuel prices are adding to inflation and there are indications that

Global oil prices have surged since the United States and Israel launched strikes against Iran on Feb 28. Iran has retaliated by choking off

The Reserve Bank of Australia said it had lifted its cash rate 25 basis points to 4.35%, pointing to economic