The Asian Development Bank (ADB) expects Indonesia’s inflation to reach 3.3% in 2026 and 3.0% in 2027, revising its July forecasts of 3.0% and 2.5%, respectively. It kept its growth outlook at 5.2% for both years.

ADB sees stronger-than-expected activity in the first half of 2026 as a supportive base. Momentum may ease in the second half as government spending and household consumption normalize, while external demand remains soft.

External pressures, including global energy prices and imported inflation, underpin the higher price outlook. Inflation is expected to ease in 2027 toward the midpoint of the target range. Food-price pressure is expected to remain moderate, although weather conditions warrant monitoring. Adequate rice reserves and policies supporting farm output could help cushion supply-side pressure.

The report flags El Niño, forest fires and peatland fires as downside risks. If weather events or other disasters significantly disrupt output and economic activity, growth risks could rise. So far, dry weather has not materially affected staple-food production, and agriculture has remained resilient.

Irrigation, food reserves, social assistance, price stabilization and priority programs are among the buffers cited for protecting vulnerable households. Continued coordination between the government and Bank Indonesia is also expected to help anchor inflation expectations. ADB expects BI to keep a prudent interest-rate stance through the end of 2026, given tight global financial conditions and the rupiah’s sensitivity to capital flows.

High global borrowing costs and weak external demand could raise financing expenses, constrain capital inflows and weigh on private investment. Geopolitical or trade tensions and slower growth among key trading partners may pressure exports and the rupiah, while adding to imported inflation and energy costs. Higher subsidies and compensation could also narrow fiscal room.

On the domestic side, ADB identifies local demand and private investment as growth supports. Social protection and price stabilization are expected to underpin household spending, while budget execution may support infrastructure, capital spending and strategic projects. The 2026 fiscal deficit is projected to remain below the 3% of GDP ceiling. In 2027, softer global inflation and lower energy prices could ease import-price pressures, while continued financial intermediation may support investment and domestic demand.

Source: “ADB Prediksi Inflasi Indonesia Naik jadi 3,3% pada 2026, 3,0% pada 2027,” Bisnis.com, Nadia Larisa, November 2, 2026. https://ekonomi.bisnis.com/read/20261102/9/2017458/adb-prediksi-inflasi-indonesia-naik-jadi-33-pada-2026-30-pada-2027