Seasonal Factors Boost Economic Growth to 5.29%
Statistics Indonesia (BPS) has just released the national economic figures. Amid geopolitical turmoil and global economic uncertainty, we should be grateful that the national economy still grew by 5.29% (yoy).
The school holiday period last July contributed significantly to the growth of the accommodation, food and beverage sector, which grew by 10.6%. Likewise, the start of the school and higher education admission period, as well as grade promotions, also played a role. These seasonal factors helped drive growth in the telecommunications sector, so that the information and communication sector grew by 6.97% in the second quarter of 2026.
The extremely hot dry season also boosted demand for electricity to supply air conditioning, while geopolitical conflict increased gas prices, so the electricity and gas sector grew by 10.81%.
However, we must be wary of the slowing growth in the manufacturing industry. In the first quarter of 2026, manufacturing grew by 5.04% (yoy), but in the second quarter of 2026 it grew more slowly, at 4.52%. The government needs to pay close attention to this because manufacturing contributes 18.5% of GDP, accounts for 13.5% of the national workforce, and reflects the majority of formal employment.
Last month we also had a simultaneous rice harvest in various regions. Unfortunately, this has not been enough to provide a positive trend for agricultural sector growth. In the first quarter of 2026, the agricultural sector grew by 4.97% (yoy), while in the second quarter it grew more slowly, at 3.8% (yoy).
This should be a concern for the government because the agricultural sector reflects the primary sector and contributes 13.57% to GDP. The agricultural sector also accounts for 28.75% of the national workforce, making its role highly strategic.
From the demand side, household consumption slowed slightly. In the first quarter of 2026 it grew by 5.52%, driven by the homecoming and Eid festivities. In the second quarter of 2026 it grew more slowly at 5.05%, but this achievement is still something to be grateful for, as household consumption, which underpins 53.3% of GDP, continues to perform well.
At the same time, investment in capital goods (PMTB) and exports also showed positive growth. PMTB grew by 6.87% and exports by 4.13%, even though in the first quarter of 2026 national exports only grew by 0.9%.
Informal Workers Still Dominant
Amid the issue of layoffs in various sectors, the employment picture still shows positive figures. Workers in both the formal and informal sectors increased. Formal sector workers in February 2026 reached 59.93 million, rising to 60.31 million (40.7%) in May 2026, while informal workers rose from 87.74 million in February 2026 to 87.88 million (59.3%) in May 2026.
Although the formal sector’s capacity to absorb workers has increased, this achievement has not significantly changed the proportion of formal and informal workers compared to 2025. In November 2025, formal sector workers still accounted for 42.30% and informal workers 57.7%. This means that in one semester, the proportion of informal workers increased by 1.6% compared to the end of last year, while the proportion of formal workers decreased by 1.6%.
The challenge going forward is how to increase the proportion of formal workers to be much larger than informal workers. The key is to improve the business climate in the industrial and wholesale trade sectors, and to continue promoting inclusion in higher education.
I suspect that the still-large gap between formal and informal workers has contributed to the rise in social inequality (Gini ratio). According to BPS, the Gini ratio in March 2026 reached 0.368, up from 0.363 in September 2025. The increase in the Gini ratio was particularly pronounced in urban areas, rising from 0.383 to 0.387.
The figures above also explain that those who remain employed in the formal sector are better able to survive, or even grow, thanks to the support of various social security schemes, while those in the informal sector are more exposed to rising inflation in the transport, education, health and food sectors.
I hope the government will implement affirmative programmes to provide various social security schemes, particularly targeted at informal workers, such as scholarships, easier access to BPJS, and expansion of employment opportunities.