This study assesses the impact of sovereign bond and sukuk market (Islamic bond market) development, as one of Indonesia's financing instruments, on the growth of its economy and vice versa. It uses the 2009-2016 quarterly longitudinal data of outstanding bond and sukuk as a proxy of the size of the bond and sukuk markets, as well as the GDP of Indonesia as a proxy of the size of its economy. The VAR model and granger causality test were used to determine the direction of causality while Impulse Response Function and Variance Decomposition analysis measured the impact of shock on each variable of the economy. The results show that only sovereign sukuk has a positive impact on the Indonesian economy which means it is more productive compared with the conventional sovereign bond.