Approaching Two Years of the Prabowo Administration: These are the 7 Latest Economic Indicators
The final quarter of 2026 officially commenced on Thursday (1/10/2026). This period coincides with the approaching second anniversary of President Prabowo Subianto’s administration on 20 October. These two moments provide an opportune time to reassess Indonesia’s economic condition, especially as recent data presents a diverse picture.
The economy continues to grow above 5% and investment is increasing rapidly. Consumer confidence and retail sales have also begun to improve. However, pressures have not entirely vanished; inflation has risen again, the Rupiah remains weak, imports are growing significantly faster than exports, and the number of layoffs has increased.
Here is an overview of the Indonesian economy as it enters the fourth quarter of 2026 and approaches the second year of the Prabowo administration.
- The Economy Continues to Grow Above 5%
Latest economic growth data from the second quarter of 2026 shows that Indonesia’s economy grew by 5.29% year-on-year (yoy), according to Statistics Indonesia (BPS). While this represents a slowdown from the 5.61% growth recorded in the first quarter of 2026, the overall economy grew by 5.45% throughout the first half of this year.
Household consumption remains the primary driver, growing by 5.06% and contributing 2.67 percentage points to economic growth. Government spending also increased by 15.97%, driven by the payment of the 13th-month salary and increases in spending on employees, goods, and services. Conversely, exports grew by only 4.13%, while imports surged by 8.82%. This condition indicates that the domestic economic engine is still running, but the fact that import growth outpaces exports means foreign trade has not yet significantly contributed to growth.
Regarding Per Capita figures, the latest annual data shows Indonesia’s GDP per capita reached Rp83.7 million (approximately US$5,083) in 2025, an increase from Rp78.6 million (US$4,960) in 2024. Nominally, GDP per capita in Rupiah rose by about 6.5%. However, this figure does not imply that every Indonesian resident earns Rp83.7 million per year, as GDP per capita merely divides national economic value by the population. This indicator must be read alongside data on poverty, inequality, employment, and public consumption.
- Inflation Rises Again
As the final quarter of 2026 begins, price pressures are starting to increase. BPS recorded Indonesia’s inflation at 3.28% year-on-year in September 2026, up from 3.19% in August and 2.88% in July. Despite the increase, inflation remains within Bank Indonesia’s target of 2.5% plus/minus 1%.
On a monthly basis, the prices of goods and services rose by 0.30%. Year-to-date inflation through September was recorded at 2.17%. Price increases were particularly felt in several daily necessities, especially food; the prices of chillies, rice, eggs, and chicken were among the commodities driving monthly inflation. While inflation remains within target and is not yet alarming, it is approaching the upper limit of Bank Indonesia’s 3.5% target. If food and energy prices continue to rise, Bank Indonesia’s room to lower interest rates may become increasingly limited.
- Consumer Confidence Begins to Recover
Positive news comes from the Consumer Confidence Index (CCI). Bank Indonesia’s consumer survey shows the CCI rose from 116.8 in July to 118.5 in August 2026. The figure remains above 100, indicating that the public remains optimistic about economic conditions. Public assessment of current economic conditions also improved, with the Current Economic Condition Index rising from 107.9 to 109.4. Meanwhile, the Consumer Expectation Index rose from 125.7 to 127.6, suggesting greater confidence in income, job opportunities, and business activities in the coming months. However, this improvement needs to be monitored in the following months, as consumer confidence could shift if essential prices rise or the labour market worsens.
- Retail Sales Return to Growth
Recovery is also evident in retail sales. The Real Sales Index grew by 1.1% year-on-year in July 2026, an improvement after retail sales contracted by 3% in June and 3.9% in May. Bank Indonesia estimates that retail sales will continue to grow by 0.5% in August, primarily supported by sales of spare parts, accessories, and the food, beverage, and tobacco group. The return of retail sales to positive territory signals that consumer spending is recovering after weakening mid-year, though growth remains slim, suggesting consumers are spending but are not yet bold enough to significantly increase expenditure.
- Trade Balance Returns to Large Surplus
Indonesia’s trade performance improved sharply in August 2026. BPS recorded a trade surplus of US$3.55 billion, a significant jump from the thin US$122 million surplus in July and the largest monthly surplus since September 2025. Exports reached US$26.61 billion, growing by 6.72% year-on-year, while imports were recorded at US$23.06 billion, a much higher increase of 19.09%. From January to August 2026, Indonesia maintained a trade surplus of US$7.25 billion. This surplus stemmed from a non-oil and gas trade surplus of US$28.54 billion, though it was eroded by an oil and gas deficit of US$21.29 billion. Metal exports, including nickel, iron, steel, and aluminium, helped support the improvement, though the fact that import growth remains much higher than export growth remains a point of note.