Indonesia optimistic about economic growth outlook for 2026
Indonesian President Prabowo Subianto has set an economic growth target of 5.4% in 2026, with inflation at 2.5% and stable macroeconomic indicators.
An Indonesian street vendor sells fruits. Photo courtesy of Invest Indonesia.
Speaking at the opening session of the House of Representatives in Jakarta last Friday, Prabowo said this optimism is based on sound financial management, coupled with economic restructuring and productivity improvements. He also set a target for interest rates to remain at around 6.9%.
He stressed the goal of balancing the national budget by 2027 or 2028, putting an end to the prolonged fiscal deficit of recent years. This is considered a turning point in strengthening public finances, easing debt pressure, and enhancing the capacity to invest in priority sectors.
The Indonesian government expects to reduce the unemployment rate to 4.44-4.96% and the poverty rate to 6.5-7.5% by 2026. The Gini coefficient is projected to fall to 0.377-0.38, while the Human Capital Index (HCI) is expected to rise to 0.57.
Improving farmers’ welfare index and the share of formal employment are also among the priority targets.
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