Indonesian economy tops estimates to grow 5.6pc
Indonesia’s economy grew 5.6 percent on an annual basis in the first quarter of 2026, the national statistics agency said Tuesday, exceeding the government’s own forecast despite pressures of the Middle East war.
The reading surpassed the 5.4 percent recorded in the final three months of 2025, Statistics Indonesia (BPS) head Amalia Adininggar Widyasanti told.
Household expenditure was the biggest contributor to the growth, Amalia added.
The government of President Prabowo Subianto is aiming to raise the Southeast Asian economy’s growth rate from 5.1 percent last year to 8 percent by 2029, powered by high public spending.
Amalia said government expenditure grew more than 21 percent in the first quarter compared to a year earlier.
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 a net importer, and heavily subsidises fuel consumed domestically.
Between a fifth and a quarter of its oil came from the Middle East, but 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 (around $400 million) to the state budget.
Jakarta’s 2026 fuel subsidy calculation had been premised on a global oil price of $70 per barrel, which was pushed past $100 a barrel by the U.S.-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.
| Nepal Economic Indicators | ||||||
|---|---|---|---|---|---|---|
| Details | Last | Previous | Highest | Lowest | Value | Reference |
| Currency | 152 | 151 | 153 | 69.62 | May/26 | |
| GDP Annual Growth Rate | 4.6 | 3.7 | 9 | -2.4 | percent | Dec/24 |
| Unemployment Rate | 10.7 | 10.6 | 13 | 10.4 | percent | Dec/24 |
| Inflation Rate | 3.62 | 3.25 | 30.42 | -11.54 | percent | Mar/26 |
| Interest Rate | 5.75 | 5.75 | 8.5 | 5 | percent | Apr/26 |
| Balance of Trade | -142798 | -158336 | 1407984 | -167318 | NPR Million | Feb/26 |
| Current Account | 2140032 | 221707 | 2140032 | -623376 | NPR Million | Dec/24 |
| Current Account to GDP | 5.2 | 3.9 | 5.4 | -12.5 | percent of GDP | Dec/24 |
| Government Debt to GDP | 42.6 | 42.9 | 64.6 | 22.3 | percent of GDP | Dec/24 |
| Government Budget | -2.7 | -5.8 | -1.3 | -9.3 | percent of GDP | Dec/24 |
ADB’s $70 bn energy and digital infra push puts Southeast Asia center stage
The Asian Development Bank $70 billion plan, backing new energy and digital infrastructure in the region, is set to boost Southeast Asia the most.
The program includes a pan-Asia power grid initiative, connecting national and subregional power systems, and an Asia-Pacific digital highway to close the infrastructure gap in the region, according to ADB that has set 2035 as the deadline for funding projects.
“Energy and digital access will define the region’s future,” said ADB President Masato Kanda said in a statement on Sunday.
That connectivity will build the systems Asia and the Pacific need to grow, compete, and connect, Kanda said. “By linking power grids and digital networks across borders, we can lower costs, expand opportunity, and bring reliable power and digital access to hundreds of millions of people.”
While the funds are for the entire Asia-Pacific region, experts say that Southeast Asia is expected to be the major beneficiary of ADB’s connectivity push.
The bank typically leans toward developing member countries based on growth needs, project readiness and mandate, beyond sheer market size, said Greg Statton, vice president and chief technology officer for Asia Pacific and Japan at AI-powered data security firm Cohesity.
Statton noted that unlike Southeast Asia, China has largely moved away from ADB financing with its own finance institutions and policies in place. India has strong access to capital markets and runs many domestically financed projects, even though it still receives a fair amount of funding from ADB, while Japan itself is a major funder of ADB.
“Larger economies such as China, India, and Japan already have more established domestic capital markets, deeper infrastructure financing channels, and greater fiscal capacity to fund large scale projects internally,” said Chasen Nevett, managing partner of principal investments at GMA Capital Partners, adding that Southeast Asia remains structurally underbuilt in both energy interconnection and digital infrastructure.
China’s economy slows
China’s economy is losing momentum as weak household spending, slowing exports and an aging population create deeper challenges for long-term growth, according to a new report.
The report by Modern Diplomacy said China continued to expand by about 5 percent in 2025 and early 2026, but that pace marks a sharp slowdown from the double-digit growth the country recorded in earlier decades and the 6 percent to 8 percent range seen in the previous decade.
One of the biggest concerns is weak domestic demand. The report said households are not spending enough to drive stronger growth, limiting the economy’s ability to rely more heavily on consumption.
Exports, long a major force behind China’s economic rise, are also under pressure because of global uncertainty, geopolitical tensions and rising trade barriers. The report noted that China’s growth between 2012 and 2017 was supported by strong consumption, investment and stable trade, but began weakening after 2017 as domestic demand softened and export contributions declined.
China’s demographic shift is adding to the strain. The country’s population is aging and shrinking, reducing the size of the working-age population. With labor supply tightening, productivity gains have become more important to sustaining growth, but those gains have also slowed in recent years.
Investment has also weakened. Fixed investment turned negative in 2025, reflecting weaker business confidence and structural adjustments across the economy.
China’s export sector faces additional pressure from shifting global supply chains, with some manufacturing moving to alternative markets in Southeast Asia. Higher tariffs and trade restrictions, particularly from the U.S., have also affected China’s competitiveness.
Japan may have fired its yen bazooka twice
After multiple warnings against the “speculative” and “one-sided” currency moves, Japan’s Ministry of Finance appears to have put its money where its mouth is and intervened in the yen during the country’s Golden Week holiday.
The first intervention, reportedly on April 30, came after the yen weakened past the politically sensitive 160 yen level, marking the first yen-buying operation since July 2024. The yen surged by as much as 3 percent on that day.
The yen appreciated sharply again Wednesday, fuelling market speculation that Tokyo had stepped into the currency market for a second time in recent days. The currency strengthened to as much as 155.02 per dollar from Tuesday’s close of 157.87, a gain of almost 2 percent.
While a stronger yen typically erodes the profit margins for Japanese exporters and makes their goods less price-competitive, a weaker yen raises the cost of energy, food, and raw materials, which the East Asian country is heavily reliant on.
Japan’s finance ministry may have spent as much as 5.48 trillion yen ($35 billion) to support the currency on April 30, just shy of the $36.8 billion last spent in July 2024, according to Reuters.
Authorities typically refrain from immediately confirming currency interventions, but they usually issue warnings beforehand — an intentional, strategic ambiguity that keeps the element of surprise to maximize market impact.
Malaysia keeps key interest rate at 2.75pc
Malaysia’s central bank kept its benchmark interest rate steady for the fifth straight policy meeting on Thursday, with modest inflation and steady growth offsetting energy supply disruptions arising from the Middle East conflict.
Bank Negara Malaysia maintained its overnight policy rate at 2.75 percent, as had been predicted by all 28 economists surveyed in a Reuters poll.
The latest indicators pointed towards continued growth momentum in Malaysia in the first quarter, driven by sustained domestic demand and a strong export performance, BNM said in a statement.
Moving forward, however, uncertainties surrounding the duration and severity of the Middle East conflict will affect the outlook of domestic growth and inflation, it said.
“Nevertheless, Malaysia’s strong fundamentals will continue to underpin the economy’s resilience,” the central bank said.
Malaysia’s economy is expected to grow between 4 percent and 5 percent this year, moderating slightly from the 5.2 percent expansion in 2025.
Official advance estimates showed that gross domestic product rose 5.3 percent from a year earlier in the first quarter of 2026, with the final figures to be released on May 16.
BNM said higher global commodity prices arising from the war were expected to raise domestic cost pressures, though the impact was expected to remain contained.
Headline and core inflation averaged 1.6 percent and 2.1 percent, respectively, in the first quarter of 2026, it said.
BNM said its current monetary policy stance was considered to be “appropriate and consistent with the outlook of continued price stability and sustainable economic growth,” adding that it would remain vigilant to ongoing developments.
A majority of economists polled forecast no change to the policy rate for the rest of the year, with just two of 22 expecting a 25 basis point hike in the next quarter.
UNESCO ends first phase of advancing inclusive economic recovery in Sri Lanka
UNESCO, along with the International Labour Organization (ILO) and the United Nations Population Fund (UNFPA) is contributing to a more peaceful, inclusive, and just response to the effects of Sri Lanka’s economic crisis.
The crisis hit the informal workers, who makes up roughly two-thirds of Sri Lanka’s workforce, the hardest, deepening existing inequalities—particularly for women—and limiting opportunities for inclusive dialogue. Addressing these challenges through stronger dispute resolution, gender-responsive approaches, and inter-cultural dialogue is essential for inclusive economic recovery and long-term social cohesion.
UNESCO trained 183 members from 33 community forums across Badulla, Batticaloa, and Gampaha on Conflict Sensitivity, Do No Harm, and Inter-cultural Dialogue (ICD). The trainings were delivered between October and November 2025 under the “Social Dialogue for Peace and Crisis Prevention in Sri Lanka” project, with World Vision Lanka as UNESCO’s implementation partner.
The sessions brought together grassroots actors from the agriculture, fisheries, and plantation sectors—groups that sit at the heart of Sri Lanka’s informal economy. Through facilitated dialogue and analysis, participants delved into the real conflict drivers shaping their livelihoods and communities.