Indonesia's 2026 Economic Growth Projection Revised to 5.3%

BI Adjusts Forecast Amid Global Uncertainties

Bank Indonesia (BI) has adjusted its economic growth projection for 2026 to 5.3%, a slight decrease from the government's target of 5.4% as outlined in the 2026 State Budget (APBN). According to BI Governor Perry Warjiyo, this projection takes into account the anticipated global economic slowdown and the effects of BI's monetary easing through interest rate reductions.

Economic Growth Drivers and Challenges

Current economic growth is largely supported by government consumption, which recorded a significant increase of 5.49% in the third quarter of 2025. Chief Economist of The Indonesia Economic Intelligence (IEI), Sunarsip, noted that while the overall growth remains relatively stable, it is not yet backed by a substantial recovery in private consumption. The reliance on government spending highlights the ongoing challenge of stimulating broader domestic demand.

Monetary Policy and Currency Considerations

Governor Warjiyo explained that BI's projection is based on various data sources, including statistics from the Central Bureau of Statistics (BPS) and multiple surveys conducted by BI. He also highlighted that the exchange rate is expected to remain relatively stable in 2026, averaging at similar levels to 2025 due to persistent global uncertainties. This stability is crucial for maintaining investor confidence and supporting economic growth.