Economic Structure and Geoeconomic Contestation

The Central Statistics Agency (BPS) released Indonesia’s economic growth figures on Tuesday (5 May 2026), reaching 5.61% (year-on-year) in the first quarter of 2026. This figure, on paper, conveys a reassuring message, with the economy remaining resilient amid global pressures.

However, at the same time, the economy experienced a contraction of -0.77% (quarter-on-quarter), a dynamic often considered normal but rarely analysed structurally. This is where the economy becomes intriguing. Because numbers are not answers, but starting points for more important questions.

Upon closer inspection, the structure of this 5.61% growth is not as straightforward as the headline suggests. The growth was supported by household consumption as the main contributor (2.94%), investment (Gross Fixed Capital Formation) and government spending, as well as seasonal momentum such as religious holidays and public mobility.

Sectors showing high growth, such as accommodation, transportation, and services, are largely driven by short-term consumption. This means the growth is real, but not necessarily reflective of structural depth. In the framework of Henrik Zeberg (2026), conditions like this often emerge in the late-cycle expansion phase, when the economy still appears strong, but its foundations are beginning to weaken.

‘Titanic Moment’: Economy Appears Normal

Zeberg describes this phase as the ‘Titanic Moment’, where the ship has already hit the iceberg, but the passengers are still enjoying the journey. This analogy is relevant, with consumption remaining strong on the surface, mobility increasing, and the services sector expanding. However, beneath the surface, quarterly growth is weakening, reliance on consumption is rising, and structural transformation has yet to occur.

Here lies the paradox: the economy looks good, right before pressures intensify. If we observe closely, Indonesia’s economic structure has not changed much. The five main sectors continue to dominate: manufacturing, trade, agriculture, construction, and mining. This is an old structure that remains effective, not a new one being formed.

As I have shown for a long time (Simatupang, 2007), such stability often creates a disconnect between indicators and real capacity. In simpler terms, we are stable, but not yet transformed.

BPS notes that the consumption surge was driven by: THR bonuses and government spending, seasonal activities and tourism, as well as increased public mobility. From a helicopter view, the problem is not with consumption. The problem is when consumption is interpreted as structural strength.

In Zeberg’s cycle framework, we can see that the late expansion phase is often marked by persistently strong consumption, but insufficient depth in productive investment. This creates what I term the fiscal comfort illusion (Simatupang, 2026). This condition makes stability breed a false sense of security, which in turn delays transformation.

Geoeconomic Contestation

The issue becomes more complex when placing this condition in a global context. We must recognise that the world is currently in a phase of: trade fragmentation, competition for strategic supply chains, and pressures on commodities.

In Zeberg’s perspective, this is not just a slowdown, but a transition phase towards a potential global cycle reversal. In such a situation, 5.61% growth is not enough; what matters is the position in the global system. And this position is determined by industrial depth, productive capacity, and policy integration.

Indonesia is indeed growing, but has not fully upgraded. Manufacturing is the largest source of growth, but it is still driven by domestic demand and commodity-based exports. This means we are moving, but have not shifted positions. In geoeconomic contestation, we are important, but not yet decisive.

Policy Risks and Orchestrator

This is where the greatest risk emerges. When growth appears strong, policies tend to feel sufficient. Yet in Zeberg’s framework: the most dangerous phase is when the economy still looks stable. If misread, it results in fiscal support only propping up consumption, partial downstreaming, and investments not enhancing capacity. The outcome is sustained growth, but unchanged structure.

In my article in Bisnis Indonesia (Simatupang, 2026), I emphasised that the state must act as an economic orchestrator. However, in the current context, this role becomes even more crucial, as the state must drive the reading of global cycles, anticipate reversals, channel windfalls into productive investments, and link fiscal policy with industrial transformation. Not merely maintaining growth. But changing the structure, before the cycle shifts.

Conclusion

The 5.61% economic growth is good news. But, in the framework of the global economic cycle, good news often appears in the most misleading phase. Because the economy does not collapse when weak. The economy slips when it feels strong enough.

Today, Indonesia stands at a crossroads with macro stability, but not structural depth; growing in numbers, but not fully transformed. And the most crucial question is no longer: are we growing? But: are we reading the cycle correctly or are we trapped within it?