Indonesia Aims to Boost Economic Growth Quality by Reducing Informal Workers

Jakarta, CNBC Indonesia - Indonesia successfully maintained a positive economic growth trend above 5% in the second quarter of 2026, with growth reaching 5.29% year-on-year (yoy) or an increase of 3.723% quarter-to-quarter (qtq). Throughout the first half of 2026, the Indonesian economy recorded growth of 5.46% cumulatively (ctc).

Reviewing the data release from Statistics Indonesia (BPS), which recorded economic growth of 5.29% (yoy) in Q2-2026, BNI Chief Economist Leo Rinaldy assessed it as solid growth reflected in two aspects: Indonesia managed to maintain growth above the average of its peer countries, which stood at only 3%.

Furthermore, from the expenditure side, the economic slowdown between Q1 and Q2-2026 was due to a normalisation effect of the previous year’s economic performance, while government spending managed to grow significantly, reflecting the government’s support for purchasing power. On the other hand, the real investment variable managed to rise by almost 7% (yoy), mainly supported by construction investment from both the public and private sectors, such as the physical construction of the Merah Putih Village/Subdistrict Cooperatives (KDMP).

From the manufacturing side, although slowing, several subsectors strengthened, such as textiles, footwear, and furniture, supported by export performance. In addition, Indonesia still faces challenges related to improving the quality of economic growth, particularly concerning labour data, where 59.3% of the workforce is employed in the informal sector. Therefore, the government’s focus and fiscal policy direction are aimed at opening formal employment opportunities.