The Indonesian economy in 2026 is expected to remain resilient and stable, supported by steady growth, controlled inflation, and solid domestic fundamentals. Bloomberg Intelligence projects Indonesia’s gross domestic product to grow by 5.0 percent year on year, while inflation is forecast at 2.75 percent.
At the same time, the Ministry of Finance highlights strong manufacturing activity, a sustained trade surplus, and rising consumer confidence as key buffers against global uncertainty. Together, these indicators suggest Indonesia enters 2026 with a firm economic foundation despite financial market volatility.
Indonesia Economy in 2026 Shows Stable Growth Outlook
Bloomberg Intelligence expects Indonesia’s growth momentum to hold steady through the medium term. The research firm projects economic growth to remain around 5.0 percent from 2025 to 2027, with recession risks staying minimal. “Overall, Indonesia’s economic growth is projected to remain around 5.0 percent between 2025 and 2027, with the probability of a recession within the next 12 months at only around 3 percent,” Bloomberg Intelligence stated.
This outlook reflects resilient domestic demand and improving investor participation, particularly in the equity market. The Jakarta Composite Index surged 22 percent in 2025, marking its strongest annual performance since 2014 and signaling confidence in Indonesia’s growth trajectory.
Manufacturing and Domestic Demand Support Expansion
Manufacturing activity continues to play a central role in supporting economic expansion. At the end of 2025, Indonesia’s Manufacturing Purchasing Managers’ Index reached 51.2, remaining in expansionary territory for five consecutive months. According to the Ministry of Finance, strong domestic demand, rising employment, and increased raw material purchases drove this performance.
Business sentiment also strengthened, reaching its highest level in three months. Febrio Kacaribu, Director General of Economic and Fiscal Strategy, said, “Indonesia’s economy remained resilient at the close of 2025, supportedmanufa by expansionary manufacturing activity, controlled inflation, and a trade balance that continues to post a surplus.” These conditions strengthen production capacity as Indonesia heads into 2026.
Trade Surplus and Export Performance Strengthen Outlook
Indonesia’s external sector continues to provide a vital growth anchor. In November 2025, the country recorded a trade surplus of USD 2.66 billion, extending a surplus trend that has persisted since May 2020. Cumulatively, the surplus reached USD 38.54 billion in the January to November period.
Export growth rose 5.61 percent, driven primarily by the manufacturing sector, which contributed more than 10 percent to overall export growth. This performance reflects rising value-added exports and stronger demand from major trading partners, including the United States, China, and India, as well as key ASEAN economies.
Indonesia Economy in 2026 Faces Financial Market Pressures
Despite solid fundamentals, Indonesia’s economy in 2026 still faces financial market challenges. Bloomberg noted mounting pressure in the government bond market as foreign inflows into Indonesian government securities declined sharply. Net inflows fell to just USD 25 million from a peak of USD 4.6 billion in August 2025.
“Concerns over the fiscal outlook have prompted global investors to withdraw funds from Indonesia’s bond market,” Bloomberg wrote. Meanwhile, the rupiah weakened to an eight-month low of Rp16,790 per US dollar as the budget deficit approached the 3 percent of GDP threshold, highlighting ongoing sensitivity to global risk sentiment.
Monetary Policy and Inflation Remain Key Stabilizers
Monetary policy continues to anchor stability amid market pressures. Bloomberg reported that Bank Indonesia aims to keep the rupiah within a range of Rp16,500, or even Rp16,400, per US dollar in 2026. “Bank Indonesia has signaled a cautious policy easing in 2026, with exchange rate stability remaining the top priority,” the report stated.
Inflation remains under control, with annual inflation at 2.92 percent in 2025. Although volatile food prices rose due to weather disruptions, core inflation stayed stable, supported by policy interventions to maintain price affordability.
Investment Momentum and Medium-Term Economic Prospects
Investment performance further reinforces Indonesia’s medium-term outlook. Bloomberg recorded that investment realization reached Rp1,905 trillion ( USD 120 billion) in 2025, meeting official targets despite rising market volatility. “This achievement shows that Indonesia’s appeal to investors remains intact, despite rising market volatility,” the report said.
Foreign investment in the creative economy reached Rp132 trillion (USD 8.4 billion), with sectoral growth outpacing national GDP growth. Combined with strong domestic demand and prudent macroeconomic management, these trends position Indonesia for sustainable and inclusive growth as it enters 2026.
Source: cnbcindonesia.com, antaranews.com
Image: Andrey Popov / Getty Images
