Claims of Economic Growth and Business Expansion
Behind the success in achieving the first quarter 2026 economic growth target of 5.61 per cent, many parties hope this success is consistent with real field conditions. Finance Minister Purbaya Yudhi Sadewa assesses that negative sentiments still shadow the business world. Therefore, Purbaya promises that the government will facilitate and assist the business world.
The government is committed to providing fiscal stimuli and liquidity to the business world. Together with Bank Indonesia, the government will also pursue steps to stabilise the rupiah, which is expected to create a positive ecosystem driving business development towards betterment.
So far, according to Purbaya, the government’s spending portion is only around 10 per cent of the national gross domestic product (GDP). The remaining 90 per cent comes from the private sector and society. Therefore, the government is committed to encouraging private sector growth and increasing people’s purchasing power. In 2026, Purbaya wants to ensure that Indonesia’s economy truly has tested resilience and agile adaptability.
Despite pressures from costs and global uncertainties still looming, Indonesia’s economic potential is very solid. With economic growth around 5.61 per cent, it is hoped that the business world has a sufficiently stable foundation to grow. To what extent is this possible to realise? This question is intriguing to examine following the BPS announcement on Indonesia’s economic growth results, which were somewhat beyond the expectations of observers and international institutions.
Main Challenges
The key to the business world’s success in utilising solid economic growth to develop itself is certainly not just about the availability and injection of capital, but about the speed of technological adaptation and creativity in capturing rapidly changing consumer needs. The business world must not stagnate but must have transformed into something more flexible and adaptive, especially in responding to developments in the digitalisation era and efficiency.
According to Finance Minister Purbaya, to capitalise on the economic growth momentum, the government has prepared several steps. In addition to ensuring adequate banking liquidity so that business actors have room for expansion, to maintain domestic demand, the government will also strive to preserve people’s purchasing power through the distribution of the 13th salary for civil servants and continuing state spending expansion. Beyond that, there are several other programmes developed by the government, such as reactivating bond stabilisation fund instruments to absorb pressure in the financial markets and also implementing tightening rules on foreign currency purchases without underlying transactions to dampen rupiah volatility.
The government realises that it is impossible to maintain, let alone increase, economic growth figures without involving business world support. So far, the private sector has played a significant role in investment and job creation. By opening new job opportunities, the business world will contribute to reducing unemployment, thereby providing and increasing people’s income. The impact is that purchasing power rises, so consumer spending, as one of the economic growth factors, also increases.
The problem now, amid this success in achieving high economic growth figures, the business world claims to be under pressure. This pressure is reflected in the quarterly contraction of the manufacturing sector at -1.01 per cent, the rupiah exchange rate against the US dollar continuously rising above Rp 17,400, soaring raw material costs, and so on. Moreover, they face classic problems such as threats of thuggery, various official and unofficial regional levies, and a political situation that is often fluctuating.
Based on data from the Indonesia Manufacturing Purchasing Managers’ Index (PMI) released by S&P Global, in April 2026 Indonesia experienced a decline from 50.1 in March to 49.1 in April. Our manufacturing industry is not expanding, so it can be certain that job openings are decreasing. In broad terms, the main challenges faced by the business world to rise and be expansive are:
First, operational cost pressures and rupiah weakening. Although economic growth is positive, not a few business actors feel production cost pressures increasing due to raw material inflation and wage hikes. The trade and manufacturing industries generally still depend on imported raw materials. When the rupiah exchange rate weakens, profit margins will inevitably be eroded due to rising production costs not matched by declining market demand.
Second, digitalisation and technology (AI) gaps causing SMEs to be increasingly sidelined. In 2026, adoption of Artificial Intelligence (AI) and automation is no longer an option but a necessity for efficiency. However, the biggest challenge is ensuring this technology is inclusive. SMEs, which comprise 97.6 per cent of the national economic structure, risk being left behind if AI access is only controlled by medium to large enterprises. Low digital literacy makes many business actors struggle to optimise data for business development. This is the biggest challenge faced by SME actors in the country.
Third, access to capital and regulatory complexity. Of the 65 million SMEs that exist, there are still tens of millions that cannot access formal financing mechanisms due to collateral limitations and financial track records. On the other hand, although there are simplification efforts, complex regulations and frequent policy changes create uncertainty for investors and business actors. At this point, it is no wonder that many SME actors are still struggling to adapt to the new competitive climate. They choose to wait, and sometimes even have to collapse because they are not sensitive to adaptation.