Seasonal Factors Boost Economic Growth to 5.29%

The Central Statistics Agency (BPS) has just released the national economic figures. Amid geopolitical turmoil and global economic uncertainty, we are 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%. Similarly, the start of the school and higher education admission period, as well as grade promotions, also played a role. This seasonal factor helped drive growth in the telecommunications sector, leading the information and communication sector to grow by 6.97% in the second quarter of 2026. The intensely hot dry season also boosted demand for electricity to supply air conditioning, while geopolitical conflict increased gas prices, resulting in the electricity and gas sector growing by 10.81%. However, we must be wary of the slowing growth in the processing industry. In the first quarter of 2026, the processing industry grew by 5.04% (yoy), but in the second quarter of 2026, growth was lower at 4.52%. It is important for the government to be vigilant about this because the processing industry contributes 18.5% to GDP, accounts for 13.5% of the national workforce, and reflects a large portion of formal employment. Last month, we also had a simultaneous rice harvest in various regions. Unfortunately, this was not enough to provide a positive trend for growth in the agricultural sector. In the first quarter of 2026, the agricultural sector grew by 4.97% (yoy), while in the second quarter, growth was lower at 3.8% (yoy). This needs to 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 very strategic. From the demand side, household consumption slowed slightly. In the first quarter of 2026, it grew, driven by the homecoming and Eid al-Fitr period, but in the second quarter of 2026, growth was lower at 5.05%. However, this achievement is something to be grateful for, as household consumption, which supports 53.3% of GDP, is still performing well. At the same time, the performance of capital goods investment (PMTB) and exports also showed positive growth, with PMTB growing by 6.87% and exports by 4.13%, whereas in the first quarter of 2026, national exports only grew by 0.9%. Amid the issue of layoffs in various sectors, the employment sector portrait still shows positive figures. Workers in both the formal and informal sectors increased. Formal sector workers in February 2026 reached 59.93 million, increasing to 60.31 million (40.7%) in May 2026, and informal workers rose from 87.74 million in February 2026 to 87.88 million (59.3%) in May 2026. Although the capacity for workers in the formal sector increased, this achievement has not significantly changed the proportion of formal and informal workers compared to 2025. In November 2025, formal sector workers were still at 42.30% and informal at 57.7%. This means that in one semester, the proportion of informal workers increased by 1.6% compared to the end of last year, and the proportion of formal workers decreased by 1.6%. The future challenge is how to increase the proportion of formal workers to be much larger than that of informal workers. The key is to improve the business climate in the industrial and wholesale trade sectors, and to continue to encourage the inclusion of higher education. The author suspects that the still-high gap between formal and informal workers contributes to the increase in the social inequality figure (Gini ratio). According to the BPS release, the Gini ratio in March 2026 reached 0.368, whereas in September 2025 it was 0.363. The increase in the Gini ratio was particularly noticeable in urban areas, rising from 0.383 to 0.387. These figures also explain that those who remain employed in the formal sector are more resilient, or even growing, due to the support of various social security schemes, while those in the informal sector are more exposed to inflation in the transportation, education, health, and food sectors. The author hopes for an affirmative programme from the government to provide various social security programmes, specifically aimed at informal workers, such as scholarships, easier access to the BPJS, and job creation.