Supported by Eid Celebrations, Indonesia's Q1 2026 Economic Growth Could Be Above 5%

Jakarta — Indonesia’s economy in Q1 2026 is projected to grow above 5 percent. This is particularly due to the various celebrations early in the year, ranging from the Lunar New Year to Eid al-Fitr. Arfian Prasetya Aji, an economist at Kisi Asset Management, explained that growth in Q1 2026 could be slightly higher than the historical average, in the range of 5.2% to 5.3%.

The first factor, he noted, is the plan to accelerate government spending aggressively at the start of the year. ‘With a total budget reaching Rp 809 trillion in the first quarter, the amount grew significantly by about 30 percent versus the same period last year,’ he said.

Next, Arfian said the second factor is that the financial sector’s performance shows a strong recovery through credit growth of 9.96 percent year on year (yoy) in January 2026. He explained that this growth is dominated by a surge in investment credit, working capital, and consumer credit.

Moreover, this condition is supported by strengthening economic activity, looser monetary policy observed throughout the previous year, and the Macroprudential Liquidity Incentive. The incentive helped bring lending rates down to 8.8 percent, thereby effectively stimulating credit demand in the market.

He noted that the provision of THR for civil servants and private sector workers, as well as BHR for ride-hailing drivers, could serve as a positive catalyst for consumption ahead of Lebaran 2026. The government plans THR for Civil Servants around Rp 55 trillion, while private sector THR is estimated to reach Rp 124 trillion. In addition, BHR for ojol is projected at around Rp 220 billion, bringing total disbursed funds to around Rp 179.22 trillion.