Economist: Q1 2026 Economic Growth Driven by Seasonal Factors
Jakarta (ANTARA) - Permata Bank’s chief economist Josua Pardede assesses that Indonesia’s economic growth in the first quarter of 2026 was largely driven by seasonal factors at the start of the year.
He explained that economic performance during that period was supported by a low base effect, increased demand during Ramadan and Eid al-Fitr, and accelerated government spending, including the Free Nutritious Meals (MBG) programme.
“Therefore, the figure is strong, but part of its strength is seasonal and supported by fiscal measures, not solely reflecting a broad-based increase in economic momentum,” Josua told ANTARA in Jakarta on Wednesday.
Aggregate economic growth data is indeed seen as reflecting national economic activity, but it does not necessarily depict the conditions felt by all segments of society or business sectors.
“In my view, economic growth data still reflects real aggregate conditions, but it does not necessarily reflect the conditions felt by all groups of society and all business sectors,” he stated.
Previously, the Central Statistics Agency (BPS) recorded Indonesia’s economic growth at 5.61% year-on-year in the first quarter of 2026, while quarter-to-quarter it contracted by 0.77%.
From the expenditure side, household consumption remained the main contributor with 2.94%, followed by Gross Fixed Capital Formation (PMTB) at 1.79%, and government consumption at 1.26%.
Josua detailed that statistically, economic activity did increase, as reflected in household consumption growth of 5.52%, PMTB of 5.96%, and government consumption surging to 21.81%.
Nevertheless, on-the-ground conditions are assessed as more varied. Household consumption was aided by seasonal momentum, but price pressures, a weakening rupiah, and rising energy costs are beginning to burden people’s purchasing power and the business world.
He also highlighted indicators from the manufacturing sector in April showing weakness, including the Manufacturing Purchasing Managers’ Index (PMI) dropping to 49.1, production contracting at the fastest rate since May 2025, and raw material cost pressures rising to a four-year high.
“So, GDP data does accurately depict total economic activity, but it does not fully capture the disparities in on-the-ground experiences, particularly between sectors driven by government spending and those pressured by production costs,” he explained.
According to Josua, the role of household consumption and PMTB as main supports for growth remains relevant.
This is reflected in household consumption rising from 5.11% in the fourth quarter of 2025 to 5.52% in the first quarter of 2026, driven by spending on food, transportation, communication, as well as the restaurant and hotel sectors during Ramadan and Eid al-Fitr.
Meanwhile, PMTB continued to grow solidly at 5.96%, although slightly slowing from 6.12% in the previous quarter.
Furthermore, he also acknowledged that the MBG programme and the Red and White Village Cooperatives (Kopdes Merah Putih) contributed to growth, particularly through increased investment in buildings and structures, which rose from 3.74% to 5.29%.
“So, it is very relevant to say that MBG and Kopdes Merah Putih are driving construction and PMTB, because those programmes require kitchens, warehouses, distribution facilities, supporting buildings, equipment, and logistics networks,” he clarified.
However, the contribution of these two programmes should be placed in proportion. Because overall PMTB is still heavily influenced by infrastructure projects, private investment, property development, and procurement of machinery and transport equipment.
Investment in machinery and equipment actually slowed from 22.16% to 10.78%, which may have been affected by the slowdown in manufacturing activity during the long holiday period.
Therefore, the impact of these programmes needs to be viewed in terms of their sustainability.
“Whether the facilities built are truly productive, increase demand for local materials, absorb labour, and do not just boost short-term spending,” he concluded.