Indonesia's 2026 Economic Growth Faces Headwinds from Sumatra Disaster

Economic Impact Assessment

Indonesia's economic growth for 2026 is forecasted to be below the 5% mark due to the recent natural disasters in Sumatra, according to Mohammad Faisal, Executive Director of CORE Indonesia ¹

. The disasters affecting Aceh, North Sumatra, and West Sumatra have directly impacted production and consumption in 52 districts that contribute approximately 5% to the national GDP.

Regional Economic Projections

The economic impact varies across the affected regions:

• Aceh is estimated to face the largest negative impact with a -0.44% growth correction in Q4 2025
• North Sumatra: -0.15%
• West Sumatra: -0.36% ¹
  Source 1

  https://finance.detik.com/berita-ekonomi-bisnis/d-8294607/bencana-sumatera-bayangi-ekonomi-ri-2026-tumbuh-di-bawah-5

These figures suggest that the overall national growth for 2025 is likely to be around 5.03-5.04%, lower than initial projections ⁶

.

Government Response and Budget Allocation

The government has announced plans to allocate between Rp 53 trillion to Rp 60 trillion for disaster recovery efforts in the affected regions ²

⁵

Source 5

https://finance.detik.com/berita-ekonomi-bisnis/d-8295079/penjelasan-istana-soal-anggaran-rp-60-triliun-buat-pulihkan-sumatera

. This allocation is part of the 2026 state budget (APBN) and is aimed at supporting reconstruction, infrastructure repair, and economic revitalization.

Policy Measures and Stimulus Packages

To mitigate the economic impact, the government has introduced several policy measures:

1. PPh 21 Exemption: Workers earning less than Rp 10 million per month are exempt from income tax in 2026 ⁴
   Source 4

   https://nasional.kontan.co.id/news/gaji-di-bawah-rp10-juta-bernapas-lega-negara-ambil-alih-pph-21-pekerja-di-5-sektor
2. Economic Stimulus Package: Part of the APBN 2026 aimed at maintaining consumer purchasing power
3. Infrastructure Reconstruction: Focus on rebuilding critical infrastructure in affected regions

Economic Outlook and Projections

The Ministry of Finance has projected a 5.4% growth target for 2026, though economists believe this might be challenging given the current circumstances ³

. Some projections suggest growth could be as low as 4.9% if the negative impacts persist throughout 2026 ¹

Source 1

https://finance.detik.com/berita-ekonomi-bisnis/d-8294607/bencana-sumatera-bayangi-ekonomi-ri-2026-tumbuh-di-bawah-5

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