Reading Economic Optimism Amid Academic Debate
Therefore, the debate regarding the growth figures should not be viewed as a setback, but rather as a sign that the quality of Indonesia’s economic discourse is maturing.
Jakarta (ANTARA) - The Central Statistics Agency (BPS) has released Indonesia’s annual economic growth for the first quarter of 2026 at 5.61%.
This figure signals optimism for the national economy. Amid a global economic slowdown, geopolitical pressures, financial market uncertainties, and weak international trade, this achievement demonstrates that Indonesia’s economy remains sufficiently resilient in facing external shocks.
However, in empirical economics, growth figures never stand alone. Economic growth is not merely about “how many percent”, but also about how that figure is formed, which sectors support it, aspects of sustainability, and consistency with other economic indicators.
Historically, Indonesia’s economic growth patterns are relatively predictable. The first quarter is usually a period of moderate growth as economic activity begins to pick up again after the end of the year. In contrast, growth generally strengthens in the third quarter and especially in the fourth quarter when government spending is fully disbursed, infrastructure projects are accelerated, and household consumption increases towards the year-end.
Therefore, the 5.61% growth in the first quarter of 2026 appears unusual. Empirically, there is a sort of overshooting growth at the beginning of the year. Growth appears to exceed its normal historical pattern. The most rational explanation is the combination of several temporary factors working together.
The acceleration of government spending from the start of the year provided a significant stimulus to aggregate demand. The momentum of Ramadan, Eid al-Fitr, and long holidays boosted household consumption, public mobility, transportation, hotels, restaurants, and retail trade. THR payments in March 2026 strengthened short-term purchasing power. Subsidies and social spending were also disbursed faster than in the previous year.
At the same time, several manufacturing sectors experienced increased production, particularly in oil and gas processing and food and beverages, which are traditionally highly sensitive to domestic consumption momentum.
Several institutions such as LPEM, CELIOS, and INDEF have openly questioned the validity of the calculations and the consistency of the growth sources. Interestingly, they did not use alternative data to criticise BPS. The criticism is instead built using BPS’s official data itself.
LPEM estimates that real growth is likely closer to the range of 4.89% and considers the 5.61% figure potentially overestimated. CELIOS argues that headline GDP does not fully reflect the economic conditions felt by society due to the gap between macro growth and the economic pressures experienced by households. Meanwhile, INDEF describes this phenomenon as “infusion growth” - the economy grows due to government fiscal injections, not because the economic engine is moving organically.
The argument that has received the most attention is the contradiction between the electricity and manufacturing sectors. According to BPS data, the electricity, gas, and water sector experienced a contraction of −0.99%, while the manufacturing sector grew by 5.04%.
Electricity and energy are the main supporters of manufacturing production. Generally, when industrial energy consumption weakens, manufacturing output also tends to slow. This is where suspicions arise that the manufacturing growth, which contributes 19% to GDP, is overestimated.
However, the modern economy no longer operates linearly like old industrial models.
The intensity of electricity use per output continues to decline due to technological efficiency, production digitalisation, industrial automation, the use of captive power, and industrial structure transformation. Many countries experience manufacturing output growth even though their energy consumption is stagnant or declining.
Moreover, at the beginning of 2025 there was an electricity tariff discount, whereas in 2026 that policy no longer applies. This is also a factor contributing to the decline in GDP growth in the electricity sector.
Temporary factors