Coordinating Minister for Economic Affairs, Airlangga Hartarto, remains highly optimistic about Indonesia’s economic growth reaching 5.4% in 2026. He affirmed that the government has already laid out comprehensive strategies to ensure the achievement of this economic growth target, as stipulated in the 2026 State Revenue and Expenditure Budget (APBN).
“We are committed to accelerating new economic engines that are our priority: the green economy and the digital economy,” Airlangga stated in a written declaration on Wednesday (3/12). This highlights the government’s strategic focus on sustainable and technology-driven sectors to propel future growth.
According to Airlangga, several positive indicators have already emerged throughout 2025. Consequently, he believes that all potential risks threatening economic growth in 2026 have been effectively managed and absorbed within the current year. This perspective suggests a proactive approach to mitigating future challenges.
“For 2026, positive risks are anticipated to be more dominant than negative ones,” he added, conveying a confident outlook for the coming year.
Emphasizing the long-term vision towards 2045, Airlangga underscored the critical need for economic growth to consistently remain on the track each year. This includes the year 2026, which continues to exhibit a positive trend, reinforcing the stability and trajectory of Indonesia’s economic advancement.
This positive momentum is visibly supported by robust economic data. Indonesia’s manufacturing activity remains expansive, with the Manufacturing PMI reaching 53.3 as of November 2025. Furthermore, consumer confidence, measured by the Consumer Confidence Index (IKK), stood strong at 121.2 in October 2025, indicating healthy domestic sentiment.
Further reinforcing this positive trend, household spending continues to strengthen, evidenced by the Mandiri Spending Index hitting 312.8 as of October 26, 2025. In another encouraging sign, motorcycle sales recorded a significant year-on-year (yoy) growth of 8.4% in October 2025, reflecting vibrant consumer activity.
Potential Economic Growth in 2026: Below Government Targets
Despite the government’s optimism, several reputable institutions project that Indonesia’s economic growth in 2026 might fall short of the official targets. The Organisation for Economic Co-operation and Development (OECD), for instance, forecasts Indonesia’s economy to grow at a more modest 5% in 2026.
“Indonesia’s Gross Domestic Product (GDP) is projected to grow by 5.0% in both 2025 and 2026, before slightly increasing to 5.1% in 2027,” the OECD stated in its December 2025 Economic Outlook report. This provides a tempered view compared to the government’s higher projection.
Nevertheless, the OECD also highlighted positive factors for Indonesia. It noted that low inflation, coupled with improving financial conditions, is expected to stimulate domestic consumption and bolster private investment, acting as crucial drivers for economic stability.
However, the OECD cautioned against a potential slowdown in export growth. “Amid escalating global trade tensions, this slowdown is anticipated to weigh on economic activity,” the OECD report indicated, pointing to external headwinds that could impact Indonesia’s trade performance.
Concurring with a more conservative outlook, Bank Mandiri Chief Economist Andry Asmoro, in his Macro Economic Outlook 4Q 2025, projected Indonesia’s economy to also remain below the government’s target in 2026. Andry anticipates a potential growth of 5.2% for the Indonesian economy that year.
“This growth will primarily be driven by robust household consumption, a recovering investment landscape, and a more expansive fiscal policy,” Andry explained, identifying key internal factors that will underpin economic expansion.
Andry further elaborated that the government’s strategic programs are expected to generate significant multiplier effects across various sectors. These include, but are not limited to, manufacturing, the processing industry, and labor-intensive sectors, suggesting a broad-based economic uplift.
Ultimately, Andry concluded that optimism regarding economic recovery will persist as long as policy coordination remains effective. He stressed that synergy among the government, regulators, and industry players is a pivotal factor in maintaining stability, strengthening national productivity, and fostering accelerated growth in the years ahead.
Summary
Coordinating Minister Airlangga Hartarto expresses strong optimism for Indonesia’s economic growth to reach 5.4% in 2026, outlining government strategies centered on accelerating the green and digital economies. This target is supported by positive indicators in 2025, including an expansive Manufacturing PMI and robust consumer confidence, with anticipated risks effectively managed. The government emphasizes consistent growth as crucial for its long-term vision towards 2045.
In contrast, institutions like the OECD project a more conservative 5.0% growth for Indonesia in 2026, attributing it to potential export slowdowns despite positive domestic consumption and investment from low inflation. Bank Mandiri Chief Economist Andry Asmoro also forecasts slightly lower growth at 5.2%, primarily driven by strong household consumption, recovering investment, and expansive fiscal policy. He highlights the importance of effective policy coordination among stakeholders to generate multiplier effects and sustain economic recovery.
