Government Consumption Leads Expenditure Growth in Q2 2026: BPS

Government consumption emerged as the leading component of expenditure growth in the second quarter of 2026, according to Statistics Indonesia (BPS). The component recorded a 15.97 percent year-on-year (yoy) increase, contributing 1.07 percent to the overall economic growth. Edy Mahmud, Deputy for National Accounts and Statistical Analysis at BPS, stated that the high growth was driven by increased realisation of personnel spending and spending on goods and services during the quarter. This marks a significant recovery from the 0.33 percent contraction recorded in the same period of 2025. Mahmud explained that the growth was influenced by a low base effect from the previous year’s contraction, as well as the payment of the 13th-month salary to civil servants, military and police personnel, and the acceleration of allowances for non-civil servant educators, coupled with an increase in the number of civil servants. The rise in government spending on goods and services also supported the growth, particularly through the increased realisation of the Free Nutritious Meal (MBG) programme. Data from the Ministry of Finance showed that cumulative MBG spending reached Rp98.8 trillion up to June 2026, with Rp44.7 trillion realised in the second quarter alone, a sharp increase from Rp2.9 trillion in the same quarter of 2025. Mahmud noted that increased government spending positively impacts economic growth as every rupiah spent circulates through the business world. Overall, Indonesia’s Gross Domestic Product (GDP) at constant prices grew by 5.29 percent yoy, reaching Rp3,576.2 trillion. Besides government consumption, household consumption remained the largest source of growth, contributing 2.67 percent with a growth rate of 5.06 percent yoy and a 53.32 percent share of GDP. Gross fixed capital formation (PMTB) contributed 2.06 percent to growth, expanding by 6.87 percent yoy. Exports grew by 4.13 percent yoy, while imports increased by 8.82 percent yoy, resulting in net exports contributing negatively to growth.