BNI Economist Forecasts Indonesia's H2-2026 Economic Growth Solid Above 5%

Jakarta, CNBC Indonesia - Examining government spending data as a pillar of Indonesia’s economic growth, BNI Chief Economist Leo Rinaldy assesses that government expenditure in Q2-2026 has begun to be held back by the effects of normalisation and a low base effect, given that in Q1-2025 government spending was very small due to significant budget efficiency measures.

Leo considers government spending of 22% in Q1, falling to 16% in Q2-2026, to still be quite high because average government expenditure before the pandemic was around 5%. Currently, government spending is being driven to maintain the purchasing power of the lower class and to sustain growth momentum.

In an effort to maintain economic resilience, the Indonesian government needs to continue ensuring purchasing power through stimulus, but this needs to be expanded to the producer and industrial side. This is necessary to reduce pressure from surging production costs, which are linked to employment.

In addition, structural reforms are needed to encourage increased exports and foreign investment, which relate to human resource productivity, deregulation, and infrastructure development to reduce logistics costs.

BNI sees the potential for Indonesia’s economic growth to continue into the second half of 2026, projected to remain above 5%.