GREAT Institute Projects Indonesia's Economy to Grow by 5.3% - 5.6% in 2026
The GREAT Institute projects Indonesia’s economic growth throughout 2026 to be in the range of 5.3% to 5.6%. This projection is supported by the resilience of domestic demand, expanding business activities, and strengthening investment, although pressures on purchasing power and global uncertainty remain areas of concern.
“The projection of 5.3 to 5.6 per cent is an optimism with prerequisites. We see that the foundations of growth remain quite strong, but the composition of the growth engine is beginning to change,” said GREAT Institute Economic Researcher Adrian Nalendra Perwira in a statement in Jakarta, as quoted by Antara on Sunday (30/8/2026).
Citing the GREAT Mid-Year Economic Outlook 2026 report, titled ‘Rebuilding Confidence, Growing Optimism’, Adrian explained that the optimism regarding the Indonesian economy has a solid basis.
Although the Indonesian economy achieved a cumulative growth of 5.45% in the first half of 2026, primarily supported by fiscal stimulus and government consumption which grew by 18.62%, growth in the second half will require greater acceleration from investment and the private sector. While household consumption still grew by 5.06% year-on-year in the second quarter, there are signals for caution as the Consumer Confidence Index declined from 123.0 in April to 116.8 in July. Therefore, maintaining real income and job availability is a vital foundation to ensure household consumption remains stable.
On the other hand, positive developments are shown by the business and investment sectors. Electricity consumption in the business and industrial sectors grew by 10.04% and 6.54% year-on-year respectively, and commercial vehicle sales increased by 30.12% up to June.
Strengthening investment is also evident from the realised investment in the first half of 2026, which reached Rp1,010.6 trillion, an increase of 7.2%, followed by a surge in investment credit of 23.1% in July.
Adrian assessed that the government’s role now needs to shift from merely providing direct impulses to leveraging economic activity through the principle of ‘spending better’, regulatory improvements, and the acceleration of projects so that financing truly transforms into the expansion of private production capacity.
Although the global environment is characterised by high geopolitical risks and global economic policy uncertainty, the GREAT Institute’s projection—which sits above the estimates of the IMF and the World Bank—shows that Indonesia possesses the resilience to grow higher. To transform this resilience into quality growth, confidence remains the key factor. “Optimism cannot be commanded. It must be built. The government needs to maintain policy consistency, explain changes openly, ensure data is trustworthy, and respond to criticism with improvements,” Adrian concluded.