Bullish forecast: Workers preparing orders at a rice market in Jakarta. Indonesia’s inflation is expected to remain within the target range of 1.5% to 3.5% for the next two years, while loan growth is expected to reach 8% to 12% in 2026. — AFP
JAKARTA: Bank Indonesia (BI) has projected Indonesia’s gross domestic product (GDP) to grow by around 5.3% year-on-year in 2026, supported by rising consumption and investment.
BI governor Perry Warjiyo said during the 2025 BI annual meeting last Friday that the national economy remained “resilient,” maintaining stability with relatively high growth despite a series of global shocks.
“God willing, Indonesia’s economic performance in 2026 and 2027 will improve.
“GDP growth will be higher, consumption and investment will increase. Exports will remain relatively strong amid the global economic slowdown,” Perry said.
The central bank governor did not mention the exact target range BI projected for next year in his speech, but the presentation deck showed that Indonesia’s GDP was expected to grow within a range of 4.9% to 5.7% in 2026, placing 5.3% at the midpoint, and increase to between 5.1% and 5.9% in 2027.
He outlined several assumptions underpinning the projection, including contained inflation, a stable rupiah exchange rate, adequate foreign-exchange reserves and growing bank lending.
Inflation is projected to remain within the current target range of 1.5% to 3.5% for the next two years, while loan growth is expected to reach 8% to 12% in 2026 and 9% to 13% in 2027, according to Perry.
Loan growth has hovered around 7% since June, which is weak compared with last year’s average of 11.6%, even though an election year like 2024 typically sees businesses take a cautious stance toward new investment and delay borrowing until conditions stabilise.
“High growth requires transformation in the real economy. Industrial and structural policies have to be undertaken to increase capital, jobs and productivity,” Perry said.
The central bank also released a publication at the event containing GDP growth estimates for 2031.
Under the baseline scenario, Indonesia’s economy is projected to grow between 5.6% and 6.4%, or 6.1 to 6.9% under the “optimistic” scenario.
In the “super optimistic” scenario, GDP growth in 2031 would reach between 6.9% and 7.7%, with 7.3% as the midpoint.
Despite the upbeat projection, the figure remains below the 8% growth President Prabowo Subianto has promised to achieve during his term, which ends in 2029.
BI also forecast that Indonesia would require 11.63 quadrillion rupiah in investment in 2031.
This is a sharp increase from 6.9 quadrillion rupiah this year.
It expects the largest portion of 2031 investment to come from the private sector, followed by the state asset fund Danantara and the state budget.
Office of the Coordinating Economy Minister Airlangga Hartarto said at the same event that “almost all risks for 2026 have been factored in this year,” including interest rates, inflation and the exchange rate.
“For 2026, what we see is upside risk, with a baseline of 5.4% in accordance with the state budget.
“So, we are hoping, and we are optimistic, that next year will be better than this year,” Airlangga said.
Prabowo, who also attended the event, said the remarks from both Perry and Airlangga “reflected and provided us with a picture of the Indonesian economy that is actually very promising, somewhat calming amid global challenges full of uncertainties, where trade wars, economic wars and tough competition for global hegemony are taking place.” — The Jakarta Post/ANN
