Minister Purbaya Projects Stronger Economic Growth for 2026
Minister of Finance Purbaya Yudhi Sadewa recently voiced strong confidence in the Indonesian economy’s future trajectory, projecting that growth will accelerate to six percent in 2026.
This optimistic forecast is significantly higher than the expected rate of approximately five percent anticipated for the current year, signaling a belief in sustained and strengthened economic performance.
Purbaya shared his projection with the media, stating that, in his view, the economy is poised to expand at a “more favorable rate,” likely achieving the six percent target.
This certainty stems directly from the government’s proven track record in successfully formulating and executing a series of policies that have demonstrated effectiveness in stimulating national economic output.
The state treasurer emphasized that maintaining this momentum is contingent on the sustained application of the current successful policy framework.
He asserted that Indonesia will “remain on the right track if we continue to carry out existing policies.”
This proactive and consistent approach, rooted in the Minister’s confidence in policy continuity, is expected to solidify economic fundamentals.
The government’s achievements were visible in the fourth quarter of 2025, when the economic growth rate stood at a strong 5.7 percent.
The Minister’s assurance is that Indonesia is ready to record this elevated growth without any compromise to crucial fiscal discipline.
Fiscal Prudence Underpins Robust Growth and Job Creation
The Minister of Finance, Purbaya Yudhi Sadewa, reinforced his commitment to fiscal prudence, which acts as the bedrock for the projected economic acceleration.
He provided firm assurances to the public that the crucial fiscal deficit, when measured relative to Gross Domestic Product (GDP), will be maintained “below three percent,” thereby ensuring it remains well “within safe limits.”
He emphasized, “Rest assured, I will not deviate from the principle of fiscal prudence,” establishing a clear line that growth will not come at the expense of financial stability.
Earlier remarks by Purbaya on November 7 highlighted that the effective management of the State Budget (APBN) was instrumental in supporting the robust 5.04 percent economic growth recorded in the third quarter of the current year, a figure that showcases the stable underlying fundamentals of the Economy.
This favorable growth rate delivered tangible benefits to the workforce, generating a substantial 1.9 million new jobs and reducing the overall unemployment figure to 7.46 million.
Crucially, this success lowered the open unemployment rate from 4.91 percent in August 2024 to 4.85 percent one year later.
This simultaneous achievement of strong growth and improved labor market outcomes validates the government’s strategy of disciplined fiscal management combined with targeted economic stimulation.
Key Drivers Fueling Domestic Demand and Investment Confidence
The strong economic performance, highlighted by Minister Purbaya, was largely driven by impressive upticks in key components of domestic demand and a significant increase in Investment confidence.
Household consumption, a major pillar of the Indonesian Economy, rose by 4.89 percent year-on-year (yoy).
This surge was effectively supported by several factors, including increased public mobility, the expanding reach and frequency of digital transactions across the nation, and effective government policies specifically designed to strengthen citizens’ purchasing power.
Concurrently, government consumption also climbed notably by 5.49 percent.
This increase was fueled by a sharp 19.3 percent rise in spending on goods and a respectable 9 percent increase in personnel expenditure, demonstrating an active governmental role in stimulating demand.
Additionally, Investment, measured by gross fixed capital formation (GFCF), grew by a solid 5.04 percent yoy.
This healthy Investment growth was sustained amid strong and unwavering business confidence in the national Economic prospects, further bolstered by the government’s firm commitment to consistently nurturing and maintaining a highly conducive investment ecosystem.
The collective strength of household spending, government stimulus, and robust Investment forms the durable foundation that supports Minister Purbaya’s optimistic projection for a six percent growth rate in 2026.
Financial Analyst Commentary: Capital Allocation and Regional Growth Divergence
Minister Purbaya’s reiterated commitment to a 6% growth rate in 2026, while maintaining a fiscal deficit below 3% of GDP, serves as a powerful signal to both the domestic Finance sector and regional peers regarding Indonesia’s macroeconomic policy stability.
The key analytical takeaway is the quality of the 5.04% Gross Fixed Capital Formation (GFCF) growth.
To transition from the current 5% trajectory to 6%, Investment must shift significantly toward high-multiplier sectors.
This necessitates a clear and sustained capital allocation strategy focused on downstreaming (value-addition of natural resources) and digital infrastructure, which are the only sectors capable of absorbing large-scale capital while generating the necessary productivity gains to lift overall GDP.
Regionally, this ambitious 6% target, rooted in strong domestic demand (Household Consumption at 4.89% yoy) and fiscal discipline, positions Indonesia for substantial growth divergence relative to export-reliant regional economies like Thailand and Vietnam, which are often more vulnerable to global trade slowdowns.
The Minister’s focus on the labor market (1.9 million new jobs and reduced unemployment) demonstrates a policy intent to broaden the base of the Economy, which, if successful, will enhance social stability and make Indonesian assets more appealing to long-term Investment funds seeking resilience against external shocks.
However, achieving 6% without expanding the fiscal deficit requires either highly effective tax revenue optimization or a significant acceleration in the speed and efficiency of infrastructure spending execution, minimizing policy slippage risks in the transition period to the new administration’s budgetary priorities.
