Indonesia targets high growth to escape middle-income trap

Indonesia is focusing on high economic growth to escape the middle-income trap. Minister of Home Affairs Muhammad Tito Karnavian emphasized that achieving high, potentially double-digit growth is essential for transitioning from a developing to a developed nation. He highlighted the importance of strengthening four key components: household consumption, government spending, investment, and exports.

Regarding trade dynamics, Bank Danamon economist Irman Faiz noted that a recent rise in imports does not indicate weakening economic fundamentals. Instead, it reflects an investment-based growth cycle where increased industrial activity drives demand for capital goods, machinery, and raw materials.

In July 2026, Indonesia's imports reached $26.09 billion, a 27.02 percent increase year-on-year, while exports grew by 6.05 percent to $26.22 billion. This resulted in a trade surplus of $121.9 million, reversing a deficit recorded in June 2026.