Indonesia economic indicators show stability amid regional fiscal shifts

Indonesia's economic indicators show signs of stability and growth heading into the fourth quarter of 2026. Inflation for September was recorded at 3.28% year-on-year, remaining within the national target range of 2.5% plus or minus 1%. While core inflation eased to 2.84%, volatile food inflation remains a concern at 5.03% due to extreme weather and production fluctuations.

On the fiscal front, the 2027 State Budget (APBN) has been passed with a focus on driving expansive growth through investment and productive spending. The budget sets a 6% economic growth target, with total state spending at Rp4,106.26 trillion and a deficit of 2.4% of GDP.

Regional fiscal challenges persist, however. Bali faces a Rp1.5 trillion reduction in regional transfer funds for 2026, which officials warn could hinder infrastructure maintenance and economic growth. In Bandung, the city has had to delay infrastructure projects after only Rp9 billion of an expected Rp190 billion in revenue-sharing funds was disbursed. Meanwhile, Jakarta is proposing a regional reserve fund to mitigate risks associated with upcoming local bond repayments.