Indonesia's Manufacturing and Trade Outlook for 2026

Mixed Signals in Economic Projections

Indonesia's economic landscape for 2026 presents a complex picture with both optimistic projections and significant challenges across various sectors. The Ministry of Industry forecasts that manufacturing exports will reach $236 billion in 2026, representing a 1.45% growth from the previous year ²

. This projection is primarily driven by high-technology manufacturing sectors, particularly the Industri Logam, Mesin, Alat Transportasi, dan Elektronika (ILMATE) subsector, which is expected to contribute $99.58 billion ²

Source 2

https://industri.kontan.co.id/news/kemenperin-proyeksikan-ekspor-industri-manufaktur-tembus-us-236-miliar-pada-2026

.

Export Projections and Sectoral Contributions

The Ministry of Industry's projections break down as follows ²

:

• ILMATE sector: $99.58 billion
• Industrial Agro sector: $68.62 billion
• Chemical, Pharmaceutical, and Textile (IKFT) sector: $58.17 billion
• Small, Medium, and Miscellaneous Industries (IKMA): $9.63 billion

These figures suggest that high-tech manufacturing will continue to be the backbone of Indonesia's export growth. The overall manufacturing exports are projected to contribute 74.85% of the national export value ²

.

Challenges in Key Industries

Commodity Import Dependence

Despite positive export projections, concerns arise from the government's import quota decisions. The Ministry of Trade has set significant import quotas for 2026, including 3.12 million tons of sugar for industrial use, 17,097.95 tons of beef for industry, and 1.18 million tons of salt for Chlor Alkali Plant (CAP) needs ¹

. Economists view these large quotas as evidence that domestic production remains structurally challenged and unable to meet industrial demands consistently ¹

Source 1

https://industri.kontan.co.id/news/kuota-impor-gula-daging-dan-garam-di-2026-cerminkan-produksi-lokal-belum-maksimal

.

Textile Industry Pressures

The textile and textile products (TPT) industry, while still growing at an estimated 4% in 2025, faces significant structural pressures ³

. The Asosiasi Produsen Serat dan Benang Filament Indonesia (ApsyFi) warns that without stronger domestic market protection, the industry will be threatened in 2026 due to rising imports and changing global competition dynamics ³

Source 3

https://industri.kontan.co.id/news/apsyfi-tanpa-perlindungan-pasar-domestik-industri-tpt-terancam-pada-2026

.

Government Strategies and Global Context

Trade Ministry Initiatives

The Ministry of Trade remains optimistic about export growth in 2026, particularly in high-technology manufacturing sectors ⁴

. The ministry's projections are supported by strong performance in the first ten months of 2025, where Indonesian exports reached $234.04 billion, a 6.96% increase from the same period the previous year ⁴

Source 4

https://industri.kontan.co.id/news/kemendag-proyeksikan-ekspor-2026-ditopang-sektor-manufaktur-berteknologi-tinggi

.

Navigating Global Trade Risks

However, the ministry acknowledges significant global challenges, including escalating trade wars and their impact on international demand and supply chains ⁵

. The potential risks include:

1. Increased volatility in commodity prices
2. Reduced demand in key export markets
3. Supply chain disruptions for export sectors dependent on imported raw materials

Conclusion

Indonesia's economic outlook for 2026 presents a mixed picture. While the manufacturing sector is projected to grow, particularly in high-tech areas, significant challenges remain in terms of import dependence and global trade uncertainties. The government's ability to balance protection of domestic industries while promoting export growth will be crucial in determining the actual outcome for 2026.