[REVISION HISTORY]

Indonesia economic outlook: growth targets and sentiment

Updated 32 times since CLSTR started tracking revisions of this situation.

What changed

2026-09-10 12:53 UTC → 2026-09-18 04:25 UTC · added ~~removed~~

Indonesia is pursuing high economic growth to escape the middle-income trap, with officials emphasizing the need for potentially double-digit growth to transition into a developed nation. Minister of Home Affairs Muhammad Tito Karnavian identified household consumption, government spending, investment, and exports as the four essential pillars for this transition. In the manufacturing sector, the Industrial Confidence Index (IKI) for August 2026 was 52.30, a slight decrease from July’s 53.10. ~~However, 22 of 23 monitored subsectors remain in expansion, contributing 98.6 percent to non-oil and gas manufacturing GDP.~~ While the food and beverage and chemical industries drive growth, the leather and footwear subsector has contracted for four consecutive months. To bolster specific sectors, the Ministry of Industry has set a target for food and beverage exports to reach $83.08 billion by 2029, aiming for an annual growth rate of 10.9 percent through downstreaming and market expansion. Trade data from July 2026 ~~shows~~ showed a trade surplus of $121.9 million, reversing a June deficit. While imports rose 27.02 percent year-on-year to $26.09 billion, economists suggest this reflects an investment-based growth cycle driven by demand for capital goods and raw materials. million. Recent ~~data indicates~~ indicators suggest a recovery in ~~financial and consumer sentiment. The~~ sentiment; the Financial Services Authority (OJK) reported ~~that the~~ an optimistic Banking Business Orientation Index ~~reached an optimistic level~~ of 56 in July 2026, with the Risk Perception Index also remaining in the optimistic zone at 57. OJK Executive Head of Banking Supervision Dian Ediana Rae noted that banks expect to maintain credit quality and manage liquidity risks. Additionally, while the Consumer Confidence Index (IKK) rose to 118.5 in August ~~2026, up from 116.8 in July.~~ 2026. Finance Minister Purbaya Yudhi Sadewa attributed this ~~reversal~~ to ~~the impact of~~ government stimulus ~~and economic policies~~ implemented in late July and early August. ~~In September 2026,~~ To sustain this momentum, the government ~~intensified~~ is intensifying efforts to drive regional ~~economic~~ growth. Minister Karnavian emphasized ~~that~~ collaboration between central and regional ~~governments must collaborate to ensure high growth, noting that double-digit growth may be necessary for~~ governments, while the ~~transition~~ Ministry of Home Affairs is evaluating regional budget realization to ~~a high-income nation.~~ prevent year-end spending accumulation. Additionally, calls have been made to support small and medium manufacturing industries (IKM) through improved capital access and digital promotion.

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