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Government's 2026 Economic Growth Target Considered Not In Accordance With Economic Reality

The difference in projections for Indonesia's economic growth in 2026 between the government and Bank Indonesia reflects different approaches in reading the direction of the economy going forward. 

Head of Center of Macroeconomics and Finance Indef M. Rizal Taufikurahman assessed that the government's ambitious targets must be accompanied by real structural reforms so as not to lead to overestimation. 

The Ministry of Finance and Bappenas each set projections for Indonesia's economic growth in the range of 5.2%–5.8% and 5.8%–6.3%. According to Rizal, these figures reflect confidence in the acceleration of national strategic programs such as downstreaming, development of the Indonesian Capital City (IKN), and strengthening purchasing power through social spending. However, he reminded that this approach is normative and overly optimistic. 

However, this approach tends to be normatively optimistic, not fully considering external risks such as the weakening Chinese economy and the potential for global recovery to be held back due to geopolitical fragmentation and still-high global interest rates. 

"The projection tends to be optimistic, not fully considering external risks such as the weakening Chinese economy and the potential for global recovery to be held back due to geopolitical fragmentation and still-high global interest rates," Rizal told Kontan, Monday (7/7). 

On the other hand, Bank Indonesia's projection in the range of 4.7%–5.5% is considered more conservative, but based on more careful macro calculations. BI is considering the fact that domestic demand has not fully recovered and the uncertainty of the labor market after the election. 

Furthermore, Rizal emphasized that to approach the growth target above 5.5%, the government cannot only rely on short-term stimulus such as social assistance or wasteful fiscal incentives. 

"The economic reform agenda must be driven by strengthening household consumption capacity sustainably, not based on temporary social assistance," said Rizal 

In addition, according to him, investment cannot be continuously encouraged through wasteful fiscal incentives, but rather it is necessary to ensure the realization of quality investment that builds an industrial ecosystem, fills technological gaps, and opens up added value in non-traditional sectors such as medium-high technology manufacturing, renewable energy, and the MSME-based digital economy. 

Rizal also highlighted the World Bank's projection that Indonesia's economic growth will stagnate at around 4.7% in 2025 and only increase slightly to 5% in 2027. He considered this a signal that structural reform in Indonesia is progressing slowly. 

"Old issues such as stagnant labor productivity, low industrial sector efficiency, and the lack of optimal integration of the domestic supply chain still burden the potential for medium-term growth," he said. 

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Tag: 2026 Economic Growth Bank Indonesia Bappenas