Entering 2026, eight Indonesian economists expect the country’s economic conditions to improve, with growth accelerating compared to 2025. Household consumption—accounting for roughly 53% of Gross Domestic Product (GDP)—is projected to strengthen, supported by government efforts to boost purchasing power through fiscal and monetary stimulus.

Meanwhile, Gross Fixed Capital Formation (GFCF), the second-largest GDP component, is also expected to gain momentum amid rising investment activity, which contributes about 29.15% to GDP. Exports, representing 22.18% of GDP, are forecast to remain resilient amid a more favorable global trade outlook.

Growth Acceleration

Economists from financial institutions and think tanks broadly agree that Indonesia’s economy will grow faster in 2026, though still below the government’s 5.4% target set in the 2026 State Budget Law. Some projections even fall below the government’s 2025 growth target of 5.2%.

BCA’s economics team forecasts real GDP growth of around 5.1% in 2026, slightly above the estimated 5% growth in 2025. Growth drivers include aggressive fiscal and monetary stimulus, although structural challenges such as slow income growth remain a constraint.

Similar projections were shared by CGS International economist Wisnu Trihatmojo, who cited easing layoffs and improved purchasing power, alongside stronger investment supported by Indonesia’s sovereign investment fund, Danantara. Permata Bank’s chief economist Josua Pardede expects growth of 5.1%–5.2%, driven by potential interest rate cuts and subdued inflation.

Other economists present a more optimistic view, projecting growth above 5.2%, while research institutions such as CORE Indonesia foresee more moderate expansion due to persistent pressure on real wages.

Trade Environment

Easing global trade tensions and reduced tariff risks from the United States have improved optimism for Indonesia’s export performance. Net export growth in 2026 is expected to remain around 4%, though weaker demand from China could weigh on commodity prices and export revenues.

Several international trade agreements are expected to support export performance, although normalization following earlier front-loaded shipments may moderate growth.

Investment Outlook

Investment conditions are expected to improve further in 2026, potentially lifting GFCF growth to around 5%. Government spending acceleration, the role of Danantara, and increased focus on downstream industries, energy, and logistics infrastructure are expected to be key drivers.

However, attracting sustained foreign direct investment (FDI) will require stronger assurances on policy consistency, regulatory transparency, and political stability.

Rupiah Volatility

The rupiah is projected to remain under pressure in 2026. BCA estimates the average exchange rate at around IDR 16,784 per US dollar, weaker than in 2025, due to global monetary uncertainty and fragile external fundamentals.

Other economists warn of further depreciation risks, potentially reaching above IDR 17,000 by year-end, which could trigger imported inflation and dampen consumption.

Despite these risks, most economists expect Bank Indonesia to continue easing monetary policy, with interest rates potentially falling toward 4%, while the current account deficit may widen to around 0.4% of GDP.

Fiscal Deficit

To accelerate economic growth beyond its decade-long average, the government has adopted a more expansionary fiscal stance. The 2026 budget deficit is projected to rise to around 2.7% of GDP, or close to IDR 700 trillion.

While economists believe the deficit remains within safe limits below the 3% threshold, fiscal sustainability remains a concern given Indonesia’s relatively low revenue-to-GDP ratio compared to other ASEAN countries and diminishing fiscal buffers.