DBS Bank: Indonesia's Economic Fundamentals at the Start of 2026 Remain Very Solid
Jakarta (ANTARA) - DBS Indonesia Bank, through DBS Group Research, assesses that Indonesia’s economic fundamentals at the beginning of 2026 remain very solid, even as global volatility challenges in the second half of this year still need to be anticipated cautiously.
“In the midst of escalating global geopolitics and energy price fluctuations, Indonesia’s economy shows strong resilience with annual (year-on-year/yoy) growth of 5.6% in the first quarter of 2026. This figure proves the fastest growth since the third quarter of 2022,” said DBS Bank’s Senior Economist Radhika Rao in a press release received in Jakarta on Wednesday.
Indonesia’s economic growth at the start of 2026 is driven by sustained strong domestic consumption, government fiscal stimulus, increased state spending, and seasonal momentum during major religious holiday periods.
Household and government consumption grew up to 7% yoy, while investment remains solid at around 6% yoy.
According to Radhika, Indonesia enters 2026 with a positive economic foundation, but external risks require adjustments to the annual growth projection.
“Indonesia enters 2026 with confidence supported by strong fundamentals. However, the full-year growth projection still needs to be adjusted to 5.1% (from previously 5.3%) to anticipate risks of rising global energy prices and pressure on the rupiah exchange rate,” she said.
DBS Research assesses that Q1-2026 is likely to be the peak of economic growth this year. Looking ahead, economic activity is also expected to face pressure from high global energy prices, financial market volatility, and the need to maintain national fiscal discipline.
Furthermore, macroeconomic stability is said to be the main foundation in maintaining Indonesia’s economic resilience amid current global dynamics.
As presented by DBS Research, controlling inflation, fiscal discipline, and consistent policy communication are necessary to maintain market stability.
From the policymaker’s perspective, the government is expected to continue efforts to keep the fiscal deficit below 3% of Gross Domestic Product (GDP) through spending control, efficiency in priority programmes, and optimisation of state revenues.
In addition, the implementation of consistent policies, including the execution of the Job Creation Law and harmonisation of central-regional regulations, is considered important for creating business certainty and increasing investor confidence.
“Maintaining macroeconomic stability remains a key factor in supporting national growth, especially through consistent inflation control and fiscal discipline. Certainty and regulatory consistency, supported by clear and predictable policy communication, will be important factors in maintaining market sentiment and increasing investment attractiveness,” she said.
Given the situation, DBS considers strategic steps that can be taken, namely maintaining macroeconomic stability through inflation control and fiscal discipline, preserving domestic purchasing power as the main priority to support economic growth. In addition, the government needs to ensure that fiscal stimulus remains targeted and sustainable.
Business players are also advised to start anticipating potential global economic slowdown in the second half of 2026, with certainty and regulatory consistency being the main factors in increasing investment attractiveness, and clear and predictable policy communication being important for maintaining market sentiment.