Executive Summary

Key insights and market outlook

Indonesia's economic outlook for 2026 faces challenges from potential inflationary pressures and trade balance dynamics. Inflation projected to peak early 2026 due to food prices and seasonal factors ¹

. The government targets 5.4% economic growth with 2.5% inflation ³. Trade balance remains positive but faces export challenges ⁵.

Full Analysis

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Deep Dive Analysis

Indonesia's Economic Prospects for 2026: Challenges and Opportunities

Inflationary Pressures and Monetary Dynamics

Indonesia's inflation is projected to peak in early 2026, primarily driven by food prices and seasonal factors related to Ramadan and Idulfitri ¹

. According to Myrdal Gunarto, Global Markets Economist at Maybank Indonesia, the inflationary surge will be significant during January-April 2026, although not as high as December 2025 ¹. The annual inflation rate reached 2.92% in December 2025, driven by seasonal year-end factors and supply disruptions ⁴.

Trade Balance and Export Challenges

Despite maintaining a trade surplus for 67 consecutive months, Indonesia's export performance faces challenges in 2026. The trade surplus reached US$2.66 billion in November 2025, supported by non-oil and gas commodities ³

. However, export growth is expected to face headwinds due to the implementation of export duties on gold and coal, as well as potential disruptions in palm oil exports due to flooding in Sumatra ⁵.

Economic Growth Targets and Policy Directions

The Indonesian government has set ambitious targets for 2026, including 5.4% economic growth and 2.5% inflation ³

. The 2026 state budget (RAPBN 2026) projects revenue of Rp3,153.58 trillion, with Rp2,693.71 trillion coming from tax revenue. The palm oil industry is expected to maintain its strong performance, with production projected to reach 49 million tons in 2026 ².