JAKARTA: Finance Minister Suahasil Nazara has projected that this year’s gross domestic product (GDP) growth will touch 5.4% to 5.5%, in line with the state budget plan.
The minister unveiled the projection in a Financial System Stability Committee press conference on Tuesday, calling the outlook “strong”.
The GDP target set in the 2026 state budget is 5.4%, and growth in the first half of the year (1H26) averaged 5.45%.
“Support comes from the economy, from domestic economic activities. The state budget itself keeps functioning as a shock absorber; stimulus for the public keeps rolling. We have also been taking measures to stabilise food and energy prices all this time,” said Suahasil.
He refused to delve deeper, noting that Statistics Indonesia (BPS) would release its third quarter (3Q) GDP report. Suahasil said the government expected investment to “grow strongly” by virtue of downstream industrial development.
The GDP reports for 1H26 showed that gross fixed capital formation grew 5.96% and 6.87% year-on-year, respectively, in the 1Q and 2Q.
Suahasil went on to say that the agriculture sector would contribute to growth despite the unfavourable El Nino weather phenomenon.
“We see that our resilience is pretty good in the agriculture sector, even though there was El Nino.
“With the aligned policies and economic activities momentum we’re maintaining, we project (growth) in 2026 at around 5.5%,” said Suahasil, who took over the chief treasurer post from the previous minister, Purbaya Yudhi Sadewa.
The government has not backed off from its goal of attaining 8% growth by the end of President Prabowo Subianto’s term in office, but experts have taken that target with a grain of salt, given the lack of clear growth drivers that would push the expansion far beyond the 5% clip the country has enjoyed in more than a decade.
Fitch Ratings last month forecast Indonesia’s growth this year would be 5.2% due to fading fiscal support after front- loaded spending in 1H26, alongside spiking import costs eating into net exports.
The sovereign credit rating agency estimated the country’s growth would likely hover at 4.9% in Prabowo’s third year and fourth year in office, a far cry from his goal.
Nobel economics laureate James Robinson said last month that attaining Prabowo’s ambition was a tough task after presenting historical data in Jakarta to demonstrate that 8% growth per annum was the exception, not the rule.
Robinson, who co-authored Why Nations Fail with fellow Nobel recipient Daren Acemoglu, revealed that only 18 countries in the world had managed to average 8% growth for a decade or more.
Next year’s budget assumes growth of 6%, which some experts said was attainable, partly due to the fact that BPS is currently undertaking a routine renewal of the GDP calculation components, which could statistically expand the GDP. — The Jakarta Post/ANN
