Reasons Why LPEM UI Doubts 5.6 Percent Economic Growth
Researchers at the Institute for Economic and Social Research, Faculty of Economics and Business, University of Indonesia (LPEM FEB UI) have found discrepancies in the economic growth data released by Statistics Indonesia (BPS). Consequently, they doubt Indonesia’s first-quarter 2026 economic growth figure of 5.61 percent.
The analysis of this economic growth data is featured in a report titled ‘Indonesia’s GDP Growth - First Quarter 2026: Behind the 5.61 Percent Figure’, released on 11 May 2026. LPEM UI identified inconsistencies based on BPS’s own internal data.
One such issue is the inconsistency between manufacturing industry growth and the supporting sector, namely electricity, water, and gas. The manufacturing sector grew positively by 5.04 percent in the first quarter of 2026. Meanwhile, the electricity, gas, and water sector recorded a negative real value-added growth of 0.99 percent.
These two data points from BPS’s official publications are deemed unsynchronised. “Logically, both cannot be true. If electricity supply is contracting, the manufacturing sector (the largest electricity user in the economy) physically cannot grow by 5 percent,” explains the report written by Mohamad Ikhsan and Teuku Riefky.
LPEM UI considers this data inconsistency significant. This is because manufacturing is Indonesia’s largest electricity consumer, accounting for about 40-42 percent of total national electricity consumption. The relationship between manufacturing output and electricity consumption is technically fundamental, through production machines, smelting furnaces, assembly lines, and cooling systems—all requiring electricity.
Upon further breakdown, the largest user segment driving value-added growth in the Electricity, Gas, and Water sector is households, at 43 percent of total kWh sales, followed by industry at 31 percent, commercial business at 19 percent, and social/government at 7 percent.
In the first quarter of 2026, there was a seasonal pattern due to religious holidays that historically increases household electricity consumption. However, the real value-added growth in the electricity, gas, and water sector was minus 0.99 percent. This means the contraction in the industrial segment is certainly deeper than indicated by the aggregate figure.
Corrections for this data inconsistency place GDP growth for the first quarter of 2026 lower. LPEM UI estimates the actual economic growth in the range of 4.4-5.2 percent. “With a midpoint estimate of 4.89 percent.”
LPEM UI also highlights the surge in inventories within the systematic framework of the supply and use table (SUT) depicting the provision of goods and services and their use in the economy. There was an increase in inventories from Rp 4.2 trillion in the fourth quarter of 2025 to Rp 104 trillion in the first quarter of 2026. “A 25-fold surge in one quarter almost certainly reflects SUT reconciliation residuals, not actual hoarding behaviour at the company level.”
Additionally, government consumption in the first quarter of 2026 is seen as merely shifting quarterly patterns. With the total state budget unchanged, subsequent quarters will face fiscal constraints that could reduce growth by 0.3-0.5 percentage points in the second half.
For the year, LPEM UI predicts Indonesia’s economic growth will only reach 4.8-5.0 percent, with a main estimate of 4.67 percent. If calculated with the Iran war scenario and potential El Niño, growth is predicted at only 4.2-4.5 percent.
Tempo has attempted to confirm this growth data discrepancy with BPS Chief Amalia Adininggar Widyasanti. However, Amalia, or Winny as she is affectionately known, has not responded to confirmation messages until this story was published.