LPEM UI Survey: Many Economists and Practitioners Pessimistic on Indonesian Economy
Jakarta — The majority of economists and practitioners assess that Indonesia’s economic condition in the first quarter of 2026 is under pressure. Inflation is rising, economic growth tends to stagnate, and the labour market risks weakening.
This finding emerges from a survey of economic and practitioner perspectives conducted by the Institute for Economic and Social Research (LPEM), Faculty of Economics and Business, University of Indonesia (LPEM FEB UI).
Of 85 respondents comprising economists and practitioners, 41 held the view that Indonesia’s current economic condition has deteriorated compared to the previous quarter. As many as 32 respondents saw no improvement or decline. The remainder, 12 respondents, regarded the current condition as improving.
LPEM FEB UI researcher Jahen F Rezki, presenting the survey results in Jakarta on Friday (13 March 2026), stated that the average response indicated a score of -0.39. This signifies that perception tends towards economic deterioration or stagnation, with a high confidence score of 7.37 out of 10.
These survey findings remain consistent with the previous survey perceptions in October and March 2025. This means that after three consecutive surveys spanning an 18-month period, respondents remain convinced that Indonesia’s economic condition is not improving.
The survey was conducted from 24 February to 9 March 2026 through an online survey platform. The survey asked about current economic and social conditions in Indonesia, along with policy developments, and compared them with previous periods whilst assessing future expectations.
Previously, LPEM FEB UI also conducted economic expert perspective surveys in March and October 2025. The 85 respondents in the latest survey came from various backgrounds, including academia, research institutions, think tanks, the private sector, and multinational organisations and institutions.
Domestically, respondents were spread across Jakarta, West Java, Yogyakarta, Central Java, North Sumatra, West Sumatra, Banten, Gorontalo, Bali, North Maluku, South Kalimantan, Lampung, East Java, and Jambi. Internationally, respondents were scattered across Australia, England, the Netherlands, New Zealand, Singapore, South Korea, and China.
Concerning signals. Rising inflationary pressure causes higher costs for goods and services, which gradually erodes the purchasing power of Indonesian households on a daily basis.
On the inflation aspect, more than 50 per cent of respondents assessed that inflation has increased. As many as 27 per cent of respondents saw inflation as unchanged, and 6 per cent considered it to have eased.
The average response indicated a score of +0.71. This reflects a clear tendency towards increased inflationary pressure in the current period.
“Concerning signals. Rising inflationary pressure causes higher costs for goods and services, which gradually erodes the purchasing power of Indonesian households on a daily basis,” said Jahen on Saturday (14 March 2026) in Jakarta.
Over the next three months, the majority of respondents predicted that Indonesia’s economic growth would tend to stagnate with a slight tendency to weaken. As many as 42 per cent of respondents assessed that growth would remain unchanged, 33 per cent of respondents anticipated deterioration, and 25 per cent saw opportunities for improvement.
Over the coming three months, nearly all respondents predicted that inflationary pressure would increase. As many as 75 per cent of respondents forecast inflation to rise, 21 per cent of respondents expected inflation to remain stable, and 4 per cent of respondents anticipated inflation to fall.
The rise in inflation, according to respondents’ observations, is driven by global geopolitical tensions that could disrupt supply chains and energy markets. This increases price pressure within the country.
Regarding Indonesia’s business environment in the coming three months, 40 respondents stated that the situation would not change. As many as 39 respondents believed the business environment would deteriorate. As many as 6 respondents anticipated an improvement in the business environment.
Linear with the expected poor economic situation, inflation, and business environment, the labour market conditions are also less encouraging. During the first quarter of 2026, 30 respondents considered the labour market unchanged from three months prior.
In fact, 44 respondents assessed that the overall labour market condition had worsened. Only 11 respondents viewed the labour market situation as having improved.
Meanwhile, for the labour market projection over the coming three months, 37 respondents anticipated that conditions would remain unchanged. As many as 39 respondents predicted the labour market would tighten. The remainder, 9 respondents, considered Indonesia’s labour market conditions would ease.
“Weakening labour markets typically signal rising unemployment and sluggish wage growth. This places pressure on household incomes across the nation. Combined with economic deterioration and higher inflation, stagflation may become a genuine threat to Indonesia’s economy,” said Jahen.
XLSmart Director Merza Fachys, whom spoke during a media breaking-of-fast gathering in Jakarta on Friday (13 March 2026) evening, stated that the effects of conflict in the Middle East on Indonesia’s telecommunications industry have thus far not been felt, though other sectors have already experienced its impact.
The business environment, he continued, could worsen if the conflict escalation continues to intensify, particularly through increases in foreign exchange rates. Telecommunications network infrastructure investment in Indonesia is generally still highly dependent on foreign currency.
“The impact is not only on infrastructure spending debt denominated in US dollars, but also on the purchase of equipment and network infrastructure that is largely still dependent on imports. If business conditions such as these persist, there is concern that the situation could develop into a crisis, similar to what occurred during the Iraq-Iran conflict period in the 1980s and the 1998 economic crisis,” said Merza.