Institute for Research on Economics and Society – Faculty of Economics and Business – University of Indonesia

Indonesia Economic Outlook 2026 – Suboptimal Quality of 5% Growth

November 4, 2025

economic outlook 2026

SUMMARY

  • GDP is estimated to grow 4.88% (estimated range 4.86%-4.90%) in Q3 2025, 4.95% (estimated range 4.93%-4.97%) for FY2025, and 4.9% – 5.0% for FY2026.
  • Indonesia's economy recorded unexpected growth in Q2 2025, with GDP growing 5,12% (yoy), a significant acceleration from 4,87% in the previous quarter and exceeding most estimates.
  • The manufacturing sector also appeared to strengthen, increasing by 5,68% (yoy) in Q2 2025 from 4,55% in Q1 2025, the largest quarterly increase since 2011 outside the period
    pandemic.
  • Household consumption contributed 52,90% to Indonesia's GDP and grew by 4,97% year-on-year in the second quarter, slightly higher than the 4,95% growth in the previous quarter. This increase was largely seasonal, reflecting increased spending during a series of long holidays and religious celebrations.
    including Eid al-Fitr and mid-year school holidays.
  • Inflationary pressures re-emerged in Q3 2025, where headline inflation rose to 2,65% (yoy) in September, up from 1,87% in June, returning to the midpoint.
    Bank Indonesia's target range is 2,5% ± 1%. This increase was driven by supply factors, particularly rising prices for food, beverages, and tobacco, as well as other goods.
    personal care and gold jewelry.
  • Indonesia's total investment realization reached IDR 491,4 trillion in the third quarter of 2025, a 13,9% year-on-year increase and 25,8% of the annual target. This growth was further driven by strong domestic investment, which surged 40,5% year-on-year to IDR 279,4 trillion.
  • The trade surplus widened sharply amid diverging export and import trends. During July–August 2025, Indonesia maintained its 63rd and 64th consecutive monthly trade surpluses, with a combined surplus of USD 9,67 billion, up 194,9% year-on-year.

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