Economy Grows 5.29 Percent, Formal Employment Needs Expansion

Executive Director of the Center of Reform on Economics (CORE) Indonesia, Mohammad Faisal, believes Indonesia’s economic growth of 5.29 percent in the second quarter of 2026 needs closer scrutiny. According to him, this achievement surpassed CORE’s earlier projection, which estimated growth in the range of 4.8 percent to 4.9 percent. “We need to look again at what the factors actually are, including household consumption which is above five percent, even though from the existing indicators we observed, it seemed unlikely to reach five percent,” Faisal said when contacted in Jakarta on Wednesday (6/8/2026). Faisal stated that the government needs to anticipate an economic slowdown because the second quarter achievement is still lower than the first quarter of 2026. He assessed that strengthening manufacturing exports and household consumption must be a focus to maintain growth momentum in the following quarters. “This needs to be anticipated going forward by providing a stronger push for manufacturing exports,” he said. Beyond the magnitude of growth, Faisal also highlighted the quality of economic growth, particularly in terms of job creation. According to him, the decline in the unemployment rate has not been fully accompanied by an increase in formal sector employment absorption. “Unemployment is down, but many people are working in the informal sector,” he said. He believes that economic growth above five percent should be accompanied by an increase in formal job opportunities. However, the growing labour force is still largely absorbed in the informal sector, meaning the quality of economic growth needs continuous strengthening. Faisal also reminded of the importance of paying attention to social and environmental impacts when driving economic growth, especially in regions that are centres of downstream processing and mining activities. “In terms of growth quality regarding the impact on environmental and social conditions, this must not be forgotten, especially when we look at mining-producing regions related to downstream processing,” Faisal said.