Indonesia’s Economic Growth Among Highest in G20: Govt

RRI.CO.ID, Jakarta - President Prabowo Subianto held a closed-door meeting with several ministers from the Red and White Cabinet and the Committee for Financial System Stability (CFSS) at the Presidential Palace in Jakarta. The President received a report on the national economy, which showed strong performance in the first quarter of 2026 (Q1-2026).

Coordinating Minister for Economic Affairs, Airlangga Hartarto, said Indonesia’s economy grew 5.61 percent, one of the highest among G20 countries.

“We’re ahead of China, Singapore, South Korea, the Arab nations, and even the United States. This growth also exceeds the expectations of various institutions, which averaged around 5.2 percent,” Minister Airlangga said during a press briefing at the Presidential Palace on Tuesday, May 5, 2026.

He explained that household consumption and government spending, along with positive export and import performance, were the main drivers of growth. Several business sectors also recorded strong expansion.

“Exports and imports are positive. Industrial, trade, public administration, services, transportation, warehousing, agriculture, and construction are all performing well,” he said.

From a macroeconomic perspective, Minister Airlangga noted that the government has succeeded in maintaining stability. Inflation was contained at 2.42 percent, consumer confidence remains high, and the trade balance continues to post a surplus.

“Credit growth stands at 9.49 percent, while third-party funds, reflecting strong public trust, are at 13.55 percent,” he added.

President Prabowo also highlighted capital outflows in the financial markets. The government, together with relevant authorities, is assessing the causes and preparing mitigation measures.

The meeting agreed to strengthen coordination between Bank Indonesia (BI) and the Ministry of Finance to safeguard financial stability, including exchange rate management. The government also reported progress on regulations regarding foreign exchange proceeds from natural resource exports (DHE SDA), which will take effect on June 1.

For the extractive sector, particularly oil and gas, the current three-month rule will remain in place. “Revisions to Government Regulation No. 36 have been finalized. The changes stipulate that DHE SDA must be deposited into state-owned banks (Himbara) and converted into rupiah, up to a maximum of 50 percent,” Minister Airlangga said.

Meanwhile, BI Governor Perry Warjiyo expressed optimism about the rupiah’s outlook, noting that the currency is undervalued and has the potential to strengthen alongside solid economic fundamentals.

Indonesia’s fundamentals remain strong, with growth at 5.61 percent, low inflation, and high credit growth. Our foreign exchange reserves are also strong. These fundamentals indicate that the rupiah should remain stable and is likely to strengthen,” Perry said.

He acknowledged, however, that short-term pressures remain. These include global and seasonal factors such as dividend repatriation, debt payments, increased dollar demand for Hajj pilgrims, high oil prices, rising US interest rates, and a stronger US dollar.

“The yield on the 10-year US Treasury is now 4.47 percent, and the dollar continues to strengthen,” Perry said. (Gusti Panji/Lasti Martina)