Q1 2026 Economic Growth is Indeed High, but the Government Has Many Homework Assignments
Indonesia’s economy in the first quarter of 2026 recorded growth of 5.61% year-on-year (yoy), based on data from the Central Statistics Agency (BPS). Although the economy grew quite high, the government is assessed to have many homework assignments that must be addressed.
Economist and public policy expert from UPN Veteran Jakarta, Achmad Nur Hidayat, assessed that the achievement of that figure at first glance is indeed encouraging news, amid a world facing economic slowdown, geopolitical tensions, and global financial market uncertainty. Not surprisingly, the government claims it as evidence of the resilience of the national economy that remains able to grow amid heavy global pressures.
“However, the important question is, does this growth truly reflect a strong national economic health, or is it merely covering up major pressures that are quietly moving beneath the surface? Because the economy cannot be read sufficiently from one growth figure. Economic growth appears high but several fundamental indicators show warning signs that must not be ignored,” Achmad stated in his remarks on Thursday (7/5/2026).
BPS data shows that economic growth in Q1 2026 was mainly supported by household consumption growth of around 5.1% and a surge in government spending of more than 21%. Factors of Ramadan and Eid al-Fitr also boosted community economic activity.
“However, when growth is too supported by short-term consumption and fiscal stimulus, then the big question is how strong this growth can sustain after the seasonal momentum passes,” he said.
At the same time, Achmad continued, global pressures are actually getting heavier. World oil prices are rising again due to escalation of geopolitical conflicts in the Middle East and disruptions to international energy trade routes.
The Brent oil price has returned above $95 per barrel. For Indonesia, which is still a net oil importer, this situation is assessed to create double pressure on the State Revenue and Expenditure Budget (APBN) and the rupiah exchange rate.
“The rise in global energy prices is a serious threat to the sustainability of national energy subsidies. In the 2026 APBN, the government still allocates hundreds of trillions of rupiah for energy subsidies and compensation, including fuel, LPG, and electricity,” he said.
In 2025 alone, the realisation of energy subsidies and compensation reached more than Rp430 trillion. If world oil prices continue to rise and the rupiah weakens, the energy subsidy needs are estimated to potentially surge far above the APBN target.
“This is where the big problem starts to emerge. High economic growth turns out to stand on fiscal foundations that are beginning to face heavy pressure,” he revealed.
Furthermore, Achmad conveyed that the Ministry of Finance of the Republic of Indonesia recorded that state revenues did grow in early 2026, but the pace is starting to slow compared to the two previous years. The decline in export commodity prices has made state revenues from the natural resources sector no longer as strong as the commodity boom era of 2022–2024.
“State income now faces serious challenges because the needs for social spending, energy subsidies, and debt interest payments continue to increase,” he said.
At the same time, Indonesia’s External Debt (ULN) continues to grow. Bank Indonesia (BI) data shows that Indonesia’s external debt position has approached $430 billion. Although still within safe limits against Gross Domestic Product (GDP), the rising debt amid a weakening rupiah creates real fiscal risks.
“Because external debt is not just about the amount of loans, but also about the ability to pay in foreign currency. When the rupiah weakens, the debt repayment burden automatically increases,” he said.