UMKM Credit Growth Slows in Early 2026, Business Operators Remain Reliant on Own Capital

Jakarta — Credit disbursement to the micro, small and medium enterprise (MSME) sector continued to show weak performance in early 2026, even as overall banking credit growth began to strengthen and regulators expressed optimism about future MSME financing prospects.

Bank Indonesia (BI) recorded banking credit disbursement in January 2026 growing 9.96 per cent year-on-year, an improvement from December 2025’s growth of 9.69 per cent year-on-year.

“This positive performance was supported by investment credit growth of 22.38 per cent year-on-year, consumer credit growth of 6.58 per cent year-on-year, and working capital credit growth of 4.13 per cent year-on-year,” Perry stated at a press conference on Thursday, 19 February 2026.

According to him, the strengthening of credit disbursement was also driven by increased economic activity, the easing of BI’s monetary and macroprudential policies, and the realisation of government priority programmes.

“Banking credit growth needs to continue strengthening to support economic growth,” he said.

From a usage perspective, working capital credit grew 4.8 per cent year-on-year, driven mainly by the electricity, gas and clean water sectors as well as the construction sector. Investment credit meanwhile grew 21.9 per cent year-on-year, supported by agriculture, livestock, forestry and fisheries sectors as well as construction.

Consumer credit grew 7.2 per cent year-on-year, driven mainly by multipurpose credit growth of 9.9 per cent year-on-year.

However, amid growth in these various credit segments, credit to MSMEs continued to contract. In January 2026, MSME credit was recorded as declining approximately 0.5 per cent year-on-year, following a previous contraction of 0.3 per cent year-on-year.

This contraction stemmed mainly from a decline in MSME working capital credit, which contracted 4.8 per cent year-on-year. Micro-scale enterprise credit still grew marginally at 0.1 per cent year-on-year, whilst small and medium enterprise credit contracted 1.0 and 1.1 per cent year-on-year respectively.