S&P Predicts Indonesia's 2026 Economic Growth at 5.1 Percent

S&P Global Ratings predicts Indonesia’s economic growth this year will be around 5.1 percent of Gross Domestic Product (GDP). The projection is lower than the government’s target of 5.4 percent. “We forecast Indonesia’s real GDP growth at 5.1 percent this year, as economic performance is likely to slow in the coming quarters due to persistent external uncertainties and rising domestic interest rates,” S&P Global stated in its release on Monday, 13 July 2026. The outlook was released as S&P affirmed Indonesia’s sovereign debt rating at investment grade. The agency noted that while average incomes in Indonesia remain lower than in most similarly rated peers, growth is faster. GDP per capita is estimated to reach US$5,200 this year, a slight increase from US$5,100 in 2025, despite nominal GDP growth being forecast at 8.3 percent. S&P also expects Indonesia’s fiscal deficit to remain within the legal threshold. “We anticipate the government will remain committed to fiscal rules to keep the deficit below 3 percent of GDP, despite rising energy costs,” the agency wrote. The report highlighted the government’s plan to cut spending on other items, such as the free nutritious meal programme (MBG). S&P predicts the initial budget of over Rp 300 trillion for the programme will be reduced by about a third, with savings likely coming from changes to programme parameters, improved efficiency, and tighter oversight. The current account deficit is likely to widen this year, but rising export earnings and a gradual normalisation of energy markets are expected to cushion the impact. Despite significant pressure on the rupiah this year, S&P expects Bank Indonesia to respond with a range of policy tools, which will limit the drain on foreign exchange reserves.