Executive Summary

Key insights and market outlook

The Indonesian government is targeting 6% economic growth in 2026, with various strategies including strengthening social safety nets and creating new job opportunities. Minister of Finance Purbaya Yudhi Sadewa expressed optimism about achieving this target through synchronized fiscal and monetary policies ⁴

. However, economists have raised concerns about the realism of creating 3-4 million new jobs as targeted by the government ⁶.

Full Analysis

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Deep Dive Analysis

Indonesian Government's 2026 Economic Targets: Strategies and Challenges

Economic Growth Projections

The Indonesian government, led by Minister of Finance Purbaya Yudhi Sadewa, is optimistic about achieving 6% economic growth in 2026 ³

. This optimism is based on the expectation of synchronized fiscal and monetary policies that will create a more favorable economic environment ⁴. The government has been working on various initiatives to support this growth target, including strengthening the manufacturing sector and improving labor market conditions ¹.

Job Creation Targets

The government has set an ambitious target of creating 3-4 million new jobs in 2026, assuming an economic growth rate of 5.4% ⁷

. However, economists like Wijayanto Samirin from Universitas Paramadina have questioned the realism of this target, suggesting that the assumption of 555,000 to 740,000 jobs created per 1% of economic growth is overly optimistic ⁶. Wijayanto argues that the actual capacity for job creation is more likely between 300,000 to 400,000 per 1% growth ⁶.

Social Safety Nets and Labor Market Interventions

To address potential labor market challenges, the government has been strengthening social safety nets and implementing various labor market interventions. This includes the establishment of a new national labor welfare council and a task force for job creation and layoff mitigation ²

. The government has also improved the Job Loss Insurance (JKP) program through Government Regulation Number 6/2025, increasing cash benefits to 60% of wages for six months ⁵.

Manufacturing Sector Outlook

The Ministry of Industry has identified several challenges facing the manufacturing sector in 2025, including the influx of imported goods and issues with industrial gas supply ¹

. Despite these challenges, the ministry is optimistic about achieving 5.51% growth in the manufacturing sector in 2026. The government is working on addressing these challenges through various policy measures and support initiatives.

Challenges and Criticisms

While the government's targets are ambitious, various stakeholders have raised concerns about their achievability. Economists have pointed out that the job creation targets may be overly optimistic given historical trends ⁶

. Additionally, the manufacturing sector faces significant challenges that need to be addressed to achieve the projected growth ¹.

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