Indonesia's economy grows 5.45 percent, outperforming G20 peers

  Indonesia’s  economy grew 5.45 percent in the first half of 2026, outpacing the global average and ranking among the highest across G20 and ASEAN nations, driven by strong investment performance and productive  economic sectors, Coordinating Minister for Economic Affairs Airlangga Hartarto said.

Airlangga delivered the macroeconomic update to President Prabowo Subianto during a plenary cabinet meeting in Jakarta last Wednesday (October 21), marking the first two years of the administration's policy tenure.

"Our economy continues to grow above 5 percent, specifically at 5.45 percent. This is higher than the global average of 3 percent. In fact, it is the highest among the G20 nations and also one of the highest in ASEAN," Airlangga said in a statement.

Highlighting internal stability, Airlangga pointed to positive indicators including a manufacturing Purchasing Managers' Index (PMI) of 52.4, a robust trade surplus of 7.25 and consumer sentiment resting at 118.1.

Furthermore, unemployment has dropped to 4.65 percent, its lowest level since 1994, while the Gini ratio improved to 0.368.

Fiscal and monetary metrics remain sound, with the State Budget deficit maintained at 1.24 percent, foreign exchange reserves reaching US$146.3 billion to cover 6.5 months of imports, and bank lending expanding at a double-digit rate of 13.65 percent.

To safeguard purchasing power and sustain growth momentum through the end of the year, the government is launching a comprehensive fourth-quarter economic stimulus package.

The measures include the "one person, one account" rollout backed by Rp1.28 trillion (approximately US$71.11 million), a food assistance program providing 10 kilograms of rice monthly to 33.24 million households with an allocation of Rp17.54 trillion (US$974.44 million) and a wage subsidy of Rp300,000 (US$16.67) monthly for three months covering 13.3 million workers at Rp11.97 trillion (US$665 million).

Additionally, the government is preparing a year-end transportation stimulus for the upcoming Christmas and New Year holiday period, allocating Rp883.4 billion (US$49.08 million) to benefit roughly 6.6 million travelers.

This package features a 30 percent discount on travel and ferry tickets, special ASDP port pricing and government-absorbed value-added tax (VAT) for domestic air travel.

Looking ahead to January 2027, President Prabowo has directed the preparation of follow-up programs aimed at strengthening human resources and worker welfare.

Key initiatives include national internships for 150,000 participants, vocational training for 300,000 individuals, and personal income tax coverage for workers earning up to Rp10 million (US$555.56).

The administration is also evaluating an increase to the non-taxable income threshold and extending government-borne VAT policies for homes priced between Rp2 billion (US$111,111) and Rp5 billion (US$277,778), alongside subsidized housing schemes and adjusted gold purity standards for the jewelry sector.