Indonesia’s Economy Grows 5.29% in Second Quarter 2026, Anchored by Domestic Demand

Press Release

Bandung, August 22, 2026

As conveyed by Ir. Dzikri Firmansyah Hakam, S.T., Pg.Dip., M.Sc., Ph.D., Lecturer at the School of Business and Management, Institut Teknologi Bandung (SBM ITB) and Executive Director of the Institute for Energy, Economics and Finance (IEEF), in an exposition published by Media Indonesia on Saturday, August 22, 2026, the Indonesian economy demonstrated resilience amid global pressure and financial market volatility. The economy grew 5.29% year-on-year (YoY) in the second quarter of 2026, staying above 5% despite moderating from 5.61% in the first quarter, even as geopolitical conflict, trade wars, and currency volatility persisted.

In his State Address on August 14, 2026, President Prabowo Subianto cited investment realization of Rp1,010 trillion in the first semester of 2026 and more than 1.4 million jobs created. Domestic demand, according to Hakam, remains a principal cushion: household consumption grew 5.06% YoY, moderating from 5.52% but still contributing heavily given its share of the economy, supported by contained inflation of 3.34% YoY in June 2026, within Bank Indonesia’s target of 2.5% plus-minus 1%.

Bank lending grew 12.67% YoY in June 2026, with investment loans up 24.90% and working capital loans 8.94%, while the Weighted Net Balance of new loan disbursement rose to 93.08% from 38.74% a quarter earlier. Government consumption also preserved momentum, growing about 15.97% YoY on priority programs, the thirteenth salary for civil servants, and social assistance. “As long as the intermediation function of the banking system continues to operate, capital market volatility does not automatically halt production, investment, and consumption,” he explained.

Overall, the SBM ITB economist assessed that growth of 5.29% shows the economy retains buffers against external pressure: resilient domestic demand, expansive credit, supportive fiscal policy, and reserves of about US$145.6 billion at end-June 2026, equal to some 5.5 months of imports. “Growth of 5.29% is evidence that the Indonesian economy has the capacity to absorb pressure in the short term. The challenge is how to preserve that capacity so that it can support sustainable growth,” he concluded.

Source: Media Indonesia, August 22, 2026 —

https://mediaindonesia.com/nusantara/924811/ekonomi-indonesia-tumbuh-529-permintaan-domestik-jadi-penopang