BPS says Indonesia's economy remains solid underpinned by consumption and investment

Indonesia’s economic fundamentals remained robust in Q1 2026. Head of Statistics Indonesia Amalia Adininggar Widyasanti said the country’s economic fundamentals remained solid in Q1 2026, supported by household consumption, investment, and accelerated government spending. “Indonesia’s economic fundamentals remained solid in Q1 2026,” Amalia said in Jakarta on Tuesday. Statistics Indonesia reported a 5.61% year-on-year GDP growth in Q1 2026, driven by household consumption, investment, and government fiscal stimulus in early 2026. Amalia explained that household consumption remained the main growth driver, accounting for over half of national expenditure. “Household consumption indeed supported over half of Indonesia’s growing economy in Q1 2026,” she added. BPS recorded household consumption growing at 5.52%, contributing 54.38% to GDP and adding 2.94 percentage points to economic growth. Amalia noted that purchasing power remained stable, supported by increased mobility during Ramadan and Eid al-Fitr. She added that consumption growth was also evident in higher activity in trade, transport, restaurants, hotels, and digital transactions during the extended holidays. Besides household consumption, gross fixed capital formation (GFCF), or investment, grew 5.96%, contributing 28.29% to GDP. Investment contributed 1.79 percentage points to Q1 2026 economic growth. Amalia said investment growth was driven by increased demand for capital goods such as machinery, equipment, and vehicles to support production and business expansion. “Imports of capital goods rose 14.27%, foreign direct investment (FDI) and domestic investment (PMDN) grew 7.2%, and government capital expenditure increased 36.7%,” she stated. Government consumption grew 21.81%, contributing 1.26 percentage points to national economic growth. Amalia said accelerated government spending in early 2026 was a key factor driving Q1 economic growth. “Typically, government spending is limited in the first quarter, but in Q1 2026, government stimulus policies under President Prabowo led to higher budget expenditure compared to previous quarters,” she explained. She noted that accelerated spending on goods and services, along with government incentives, had a multiplier effect on economic activity earlier than in previous years. By sector, transport and warehousing grew the fastest at 8.04%, followed by trade (6.26%), manufacturing (5.04%), and agriculture (4.97%) in Q1 2026. Amalia said the growth in these sectors indicated domestic economic activity remained positive amid global uncertainties and a slowing world economy.