BI confident economy will remain strong throughout 2026, supported by domestic demand

Jakarta (ANTARA) - Bank Indonesia (BI) is confident that overall economic growth in 2026 is projected to remain strong in the range of 4.9-5.7 per cent (year-on-year), supported by domestic demand, in line with government and central bank policies to promote economic growth.

“BI continues to strengthen its policy mix through monetary policy, macroprudential policy, and payment systems, which synergise with government policies to maintain stability while still supporting economic growth,” said Executive Director of the BI Communication Department Ramdan Denny Prakoso in his statement in Jakarta on Tuesday.

Based on data from the Central Statistics Agency (BPS) released on Tuesday (5/5), the first-quarter 2026 economy recorded growth of 5.61 per cent year-on-year, higher than the previous quarter’s growth of 5.39 per cent (year-on-year).

From the expenditure side, first-quarter 2026 economic growth was supported by domestic economic activity.

Government consumption grew strongly by 21.81 per cent (year-on-year), driven by increased realisation of employee expenditure through the 14th salary or Eid al-Fitr Allowance (THR) and spending on government priority programmes, particularly the Free Nutritious Meals (MBG).

Consumption by non-profit institutions serving households (LNPRT) grew by 6.28 per cent (year-on-year), driven by increased community organisation activities.

Investment grew by 5.96 per cent (year-on-year), mainly driven by growth in sub-components of vehicles, machinery, and equipment.

From the business field side, most business fields in the first quarter of 2026 showed positive growth. The processing industry, trade, and agriculture business fields, as the main contributors to growth, performed well in line with increased domestic demand and positive external demand.

In addition, the provision of accommodation and food and beverage as well as transportation and warehousing business fields recorded high growth in line with increased public mobility during the Eid al-Fitr 1447 Hijriah period and tourism activities, both domestic and international tourist travel.

Meanwhile, from the spatial side, the highest first-quarter 2026 economic growth was recorded in Bali and Nusa Tenggara (Balinusra), followed by Sulawesi, Java, Sumatra, Maluku and Papua (Mapua), and Kalimantan.