GREAT Institute maintains its projection for Indonesia’s economic growth in 2026 at between 5.3 and 5.6 percent. The outlook is supported by resilient domestic demand, continued business activity, and strengthening investment. However, pressure on household purchasing power and global uncertainty remain important risks.
GREAT Institute economist Adrian Nalendra Perwira described the projection as optimism with several prerequisites. Indonesia’s economy grew by a cumulative 5.45 percent in the first half of 2026, supported by consumption and fiscal stimulus. Government consumption rose 18.62 percent from the same period a year earlier, while household consumption grew 5.06 percent year-on-year in the second quarter.
Entering the second half of the year, however, the composition of Indonesia’s growth drivers is beginning to change. Consumption remains an important foundation, but additional acceleration increasingly needs to come from investment and productive private-sector activity. GREAT Institute argues that the government’s role should gradually shift from providing direct economic stimulus toward leveraging broader economic activity.
On the consumption side, several indicators suggest households are becoming more selective in spending their income. Retail sales contracted from April through June before being projected to return to slight growth of 0.9 percent in July. The Consumer Confidence Index also declined from 123.0 in April to 116.8 in July. Consumption has therefore not collapsed, but household caution is becoming more apparent.
Household consumption remains one of the main pillars of the economy. Nevertheless, weaker retail sales and declining consumer confidence indicate that purchasing-power resilience cannot be assessed solely through aggregate consumption growth. Real income and employment opportunities will be essential to maintaining household consumption over the longer term.
Business indicators, meanwhile, continue to show positive activity. Electricity consumption in the business sector increased 10.04 percent year-on-year, while industrial electricity consumption rose 6.54 percent. Commercial vehicle sales also grew 30.12 percent through June 2026.
Investment is expected to become one of the main drivers of faster growth in the second half. Investment realization reached Rp1,010.6 trillion in the first half of 2026, up 7.2 percent from the same period a year earlier. Investment credit grew 23.1 percent year-on-year in July, while working-capital credit increased 11.6 percent.
The key challenge is ensuring that increased financing is translated into private capital expenditure, expanded production capacity, and job creation. GREAT Institute therefore stresses the importance of reducing investment barriers, improving regulatory certainty, accelerating projects, and ensuring that liquidity reaches productive activities. Policy should increasingly shift from “spending more” toward “spending better.”
Global risks remain part of the outlook. GREAT Institute noted that average Global Economic Policy Uncertainty in the first half of 2026 was approximately 68 percent above its 2024 average, while the Geopolitical Risk Index was around 55 percent higher. Geopolitical tensions, energy prices, global monetary policy, and changes in the international trading architecture remain potential pressures on Indonesia’s economy.
The 5.3–5.6 percent growth projection should therefore not be regarded as automatic. Beyond investment, trust will also play an important role in sustaining consumption and business expansion. Policy consistency, institutional credibility, and reliable information will influence the willingness of households and businesses to make long-term economic decisions.
Sources:
- Tribunnews – Analis Soroti Konsumsi Rumah Tangga yang Tumbuh, tapi Keyakinan Konsumen Mulai Melemah
- Warta Ekonomi – GREAT Institute Pertahankan Proyeksi Ekonomi 2026 hingga 5,6%, Investasi Jadi Kunci Semester II
- InvestorTrust – GREAT Institute Proyeksikan Ekonomi Indonesia Tumbuh 5,3%–5,6% pada 2026
- Warta Ekonomi – Konsumsi Masih Tumbuh, tapi GREAT Institute Ungkap Sinyal Daya Beli Mulai Melemah
- Industry.co.id – Investasi Jadi Kunci Akselerasi Semester II, GREAT Institute Pertahankan Proyeksi Pertumbuhan 2026 di 5,3–5,6 Persen
