Good News! Indonesia Can Grow Above 5% Amid Global Turmoil

Good News! Indonesia Can Grow Above 5% Amid Global Turmoil

Jakarta, CNBC Indonesia - Geopolitical tensions in the Middle East are shaking the foundations of the global economy, pushing up crude oil prices. The World Bank has revised its projection for Indonesia’s economic growth in 2026 from 5.0% to 4.7%.

However, the signal from the Organization for Economic Co-operation and Development (OECD) is different. The OECD sees Indonesia still capable of achieving high growth amid this global turmoil.

Director of the NEXT Indonesia Center, Herry Gunawan, assesses that the national economy’s resilience is now at a crucial testing point.

“This situation is a real test for the health of the national economy. We must look closely to see whether our economy is truly still healthy or beginning to decline under increasingly sharp external pressures,” he said in an official statement in Jakarta on Sunday (19/4).

In its latest report titled “Signals of Indonesia’s Economic Resilience”, the NEXT Indonesia Center analyses the direction of growth through the Composite Leading Indicator (CLI) instrument. The report also highlights a sharp difference in projections between international institutions, namely the World Bank and the Asian Development Bank (ADB).

The ADB provides a more optimistic view, projecting Indonesia’s economy to strengthen to achieve 5.2% growth, a figure surpassing the previous year’s achievement despite being overshadowed by global uncertainty.

Herry Gunawan emphasises that the gap in projections between 4.7% and 5.2% shows how dynamic the assessment of Indonesia’s resilience is. “The difference in projection figures proves that global uncertainty factors greatly influence international institutions’ perceptions of our economic fundamentals in 2026,” he added.

Positive Signals from OECD Data

To read the direction of momentum more objectively, the NEXT Indonesia Center uses data from the Composite Leading Indicator (CLI) issued by the OECD as the main navigation instrument. The CLI is designed as an early warning system that processes components from industrial orders to consumer confidence to capture economic cycle turning points before official Gross Domestic Product (GDP) data is released.

Based on the latest data as of March 2026, Indonesia’s CLI is still consistently above the 100 level, at 100.52. In economic interpretation, a position above the 100 threshold indicates that national fundamentals actually still have room to grow above the long-term trend average, or remain above 5%.

Herry Gunawan explains that Indonesia’s CLI figure above the 100 threshold shows that national growth momentum is still quite maintained. Compared to the average of other major Asian economies, Indonesia’s position even appears much more solid than China’s, whose CLI continues to slide below the 100 level.

“Our CLI data is indeed still above the 100 level, meaning that fundamentally, Indonesia’s economy still has room to grow above its long-term trend average. This signal serves as a compass showing that our growth momentum is still in positive territory amid global energy volatility,” said Herry Gunawan.

However, there is a cautious note regarding the slight decline in the CLI figure from 100.59 in February to 100.52 in March 2026. This momentum slowdown, although still in expansive territory, should be read as an early warning of the emergence of saturation points in the main growth engine, namely the consumption sector.

This moderation of momentum is very crucial because Indonesia’s economic structure is still heavily reliant on one main engine, namely household consumption, which contributes 53.9% to GDP. The slight decline at the beginning of this year is likely to reflect domestic consumer anxiety over potential inflation and surges in global energy prices.

“We must not turn a blind eye to the moderation that is starting to occur at the beginning of 2026. The slight weakening in February and March is an early alarm that our main growth engine, household consumption, is beginning to tire. If there is no adaptive policy intervention to maintain purchasing power, the growth target could miss the mark,” he stressed.

Historical analysis over the past 32 years proves that the CLI has high accuracy in reading turning points in Indonesia’s economic cycle, including during the 1998 and 2008 crises. Therefore, the NEXT Indonesia Center urges the government to immediately strengthen the portions of investment and exports, which are currently at 28.8% and 22.8% of GDP.

“The CLI signal is the economic direction compass. Currently, our compass is still pointing towards positive growth, but the government must immediately strengthen the contributions of investment and exports so that economic resilience does not rely solely on the shoulders of public consumption,” said Herry Gunawan.

Through this analysis, the NEXT Indonesia Center hopes that policymakers can be more vigilant towards this momentum decline signal. Adaptive fiscal policies and protection for the purchasing power of the lower classes become crucial so that this moderation phase does not continue into a deeper slowdown.