Bank Permata Projects Indonesia's 2026 Economic Growth at 5.26 Percent

Bank Permata economist Faisal Rachmat has projected that Indonesia’s national economic growth will reach 5.26 percent year-on-year (yoy) in 2026, an increase from the 5.11 percent forecast for 2025. Rachmat stated that strong domestic demand and expansionary fiscal policy are expected to be the main pillars supporting this growth. The government’s policy of maintaining subsidised energy prices amid high global energy costs is also seen as helping to preserve public purchasing power and control inflation.

However, Rachmat cautioned that this energy subsidy strategy might only be sustainable in the short term, as it risks narrowing the fiscal space. He noted that the government needs to balance its growth agenda with the necessity of maintaining fiscal buffers to withstand external shocks. From an external perspective, global uncertainties such as trade wars, geopolitical tensions, and a sluggish Chinese economic recovery pose significant risks, potentially dampening demand for Indonesian exports.

Rachmat warned that these external pressures could lead to a widening of the current account deficit and the fiscal deficit, triggering capital outflows and putting pressure on the rupiah exchange rate. While economic growth could surpass projections if global conditions improve, the opposite scenario is also possible if the balance between economic stimulus and macroeconomic stability is not maintained. Under such adverse conditions, Bank Permata sees a chance that Bank Indonesia will adopt a tighter monetary stance, including the possibility of raising the BI-Rate to safeguard stability.