Indonesia's H1-2026 Economic Growth Not Fully Reflecting Public Welfare

Indonesia’s economic growth of 5.45% in the first half of 2026 is considered not to have fully reflected improvements in public welfare. CSIS senior economist Yose Rizal Damuri assessed that the main challenge is not only pushing for higher growth, but ensuring that economic growth and especially investment are able to create more quality jobs.

According to Yose, economic growth is indeed one of the important indicators for measuring economic performance. However, high growth figures should be followed by benefits that can be felt directly by the public.

He noted that there are still a number of issues that need attention, particularly regarding job creation and the quality of investment. One of the main concerns is the employment situation. Although the unemployment rate is relatively low, most new jobs are actually created in the informal sector, whose share is said to reach around 80%. On the other hand, educated unemployment is also showing an increasing trend.

“Unemployment is low but most of the jobs created are in the informal sector, even 80%. Then the educated unemployed are also growing day by day,” Yose said during a discussion event in Tangerang on Tuesday (18/8/2026).

Another issue, Yose continued, can be seen from the ability of investment to create jobs. The continuously rising value of investment has not been followed by adequate job creation. As an illustration, every Rp 1 trillion of investment in 2014 was said to be able to create up to around 3,500 jobs. Now, that figure is estimated at only around 1,200 jobs.

According to Yose, the decline in investment’s ability to create jobs remains significant even after taking inflation into account. This condition indicates a change in Indonesia’s investment structure, which is increasingly capital-intensive and leaving behind the labour-intensive pattern. In fact, labour-intensive industries are still needed to absorb large numbers of workers, given Indonesia’s employment structure.

Therefore, Yose assessed that economic growth cannot be judged solely by the size of the growth figure. The government also needs to ensure that growth is able to create quality jobs and have a real impact on people’s lives.

“If the growth is only in numbers, and the results are not visible, that is not what we are aiming for,” Yose concluded.