Indonesia Economic Outlook 2026: Inching Toward Higher Growth
GDP growth reached 4.95% in FY 2025, with modest acceleration expected. The government's stimulus rollout, Danantara operations, and infrastructure spending are key catalysts for business strategy.
Indonesia enters 2026 with a stable growth foundation, though the trajectory of acceleration depends heavily on policy execution and external conditions. GDP growth reached 4.95% in FY 2025, with FY 2026 projections targeting 4.9% to 5.0%, driven by household consumption recovery and investment realization.
The macroeconomic backdrop is shaped by the new administration's policy agenda. The rollout of the free nutritious meal program (MBG), Danantara's investment activities, and social spending increases of 8.6% year-on-year are designed to stimulate domestic demand. The new Minister of Finance has indicated a commitment to refrain from adding new taxes to chase stronger economic growth—a signal that has been welcomed by the business community.
Manufacturing emerged as a bright spot in 2025, growing 5.68% year-on-year in Q2—its strongest quarterly improvement since 2011, excluding the pandemic period. This was driven by robust machinery investments rather than structures, indicating a shift toward capital-intensive industries. Fixed Asset Investment (FAI) reached IDR 491.4 trillion in Q3 2025, growing 13.9% year-on-year, primarily fueled by domestic investment.
Trade performance has been exceptional. Indonesia recorded a USD 9.67 billion trade surplus in July–August 2025, nearly 195% higher year-on-year. Capital goods imports have surged throughout 2025, signaling strong investment intentions, while raw materials imports have contracted—suggesting improving domestic production capabilities.
However, challenges remain. Inflation reached 2.65% in September 2025, remaining within Bank Indonesia's target range but requiring vigilance. The Rupiah's depreciation, driven by domestic factors and capital outflows, poses risks for importers and foreign currency borrowers. MSCI's planned revision to minimum free float requirements may trigger passive fund outflows from blue-chip names.
For CFOs and business strategists, 2026 requires scenario planning around three variables: the pace of government stimulus delivery, Rupiah stability, and commodity price movements. Strong CPO and gold prices may provide regional economic benefits, while weaker oil prices support Indonesia's trade position. Companies with USD earnings or commodity exposure are particularly well-positioned.
At SandyaKala & Company, we recommend businesses focus on operational efficiency improvements, supply chain localization, and capital structure optimization. The businesses that build resilience during this period of modest acceleration will capture disproportionate gains when growth fully materializes.