Indonesia Eyes 6% Growth in Early 2026 as Fiscal Discipline Tightens

JAKARTA, Investortrust.id — Indonesia expects economic growth to approach 6% in the first quarter of 2026, with Finance Minister Purbaya Yudhi Sadewa pledging tighter oversight of government spending on Wednesday, Jan 14, 2026 in Jakarta to accelerate execution and lift momentum. The outlook hinges on closer coordination between fiscal policy and Bank Indonesia, a combination officials say could materially raise output early in the year.

Purbaya said growth near 6% would be achievable if policy synchronization translated into faster, better targeted spending, signaling a shift toward hands on monitoring across ministries. He added that timely disbursement, rather than headline allocations, would determine the strength of the near term expansion.

To enforce discipline, the finance ministry said it would resume direct monitoring of ministerial budgets, with underperforming agencies facing cuts if execution lagged. Purbaya acknowledged earlier political resistance to such oversight but said the current mandate allowed firmer action to ensure fiscal stimulus reached the economy on schedule.

“That is why I have to go around personally. For ministries and agencies that tend to delay their spending, I will push them a bit so they actually get things done. When I first took this role, I also went from one ministry to another,” he said.

Business leaders have struck a more cautious tone, projecting solid growth for the entire 2026 as global headwinds persist. Anindya Bakrie, the chairman of Indonesia Chamber of Trade and Industry (Kadin Indonesia), said the economy was likely to expand by 5.4% to 5.5% in 2026, driven by trade and investment alongside household demand.

Anindya said Indonesia remained resilient despite wars and trade tensions, pointing to contained inflation and a manageable debt to GDP ratio that preserved policy space. He added that successful execution of government programs could generate meaningful multiplier effects across sectors.

“The global economy is not in good shape. It is not just trade wars, there are real wars as well. But we see that Indonesia is among the world’s top five economies in terms of growth at scale, and it also maintains well controlled inflation,” Anin said.

From a global bank perspective, momentum built in late 2025 was expected to carry into 2026. Pranjul Bhandari, chief economist for Indonesia and India at HSBC Global Research, said, “After the pandemic impact, I think 2025 ended on a fairly strong note, and this is a strength we can carry forward into 2026.”

She attributed the rebound to a 150 basis point rate cut by Bank Indonesia and expanded social protection that lifted domestic demand, with manufacturing indicators confirming the trend. “What really pushed the PMI data to be stronger was much higher domestic demand,” she said.

Still, Bhandari cautioned that part of the consumption recovery reflected households drawing down savings, a pattern she said was not sustainable. “For durable growth, consumption should be supported by wage increases and job creation, not by spending savings,” she said.

HSBC forecasts GDP growth of about 5.2% in 2026, with softer exports offset by domestic demand and room for additional, opportunistic rate cuts if currency conditions allow. Over the medium term, Bhandari said reforms in manufacturing and foreign direct investment were essential as global supply chains reconfigure and producers seek new bases.