Bank Indonesia Head Confident Indonesian Economy Will Perform Well in First Quarter 2026, Supported by Eid Holiday and Village Cooperatives

Bank Indonesia (BI) projects that Indonesian economic growth will accelerate in the first quarter of 2026. This forecast was announced by BI Governor Perry Warjiyo during the release of the central bank’s March 2026 monetary policy decision on Tuesday (17 March 2026).

“Economic growth in the first quarter of 2026 will increase and remain strong, supported by robust domestic demand,” said Perry.

Perry noted that household consumption will rise owing to major religious holidays and holiday allowances (Tunjangan Hari Raya), government social spending, and other incentive programmes. Meanwhile, BI forecasts that Indonesia’s investment will increase, driven by the acceleration of government investment including the Koperasi Desa Merah Putih (Red and White Village Cooperatives) initiative.

Nevertheless, BI cautioned that the government must respond to deteriorating global economic prospects resulting from conflicts in the Middle East.

“To this end, coordination between the government and BI must be strengthened to maintain domestic demand and support economic growth of 4.9-5.7 per cent in 2026,” Perry emphasised.

On this occasion, Perry also disclosed that global economic growth prospects will continue to weaken due to the impact of the conflict between Iran, the United States, and Israel.

He projected that global economic growth will slow to 3.1 per cent, down from the previous forecast of 3.2 per cent, as a result of the Middle East conflict.

“Global economic growth is projected at 3.1 per cent, down from the previous 3.2 per cent, despite the reduction in US reciprocal tariffs,” said Perry.