Economist Questions Indonesia's Economic Growth Data, Cites Consumer and Industry Contradictions

Nailul Huda, Director of Economics at the Center of Economic and Law Studies (CELIOS), has expressed skepticism regarding the Indonesian Central Statistics Agency's (BPS) reported economic growth of 5.29% for the second quarter of 2026. Huda argues that this figure, higher than the 5.12% growth in the same period last year, does not align with the prevailing economic conditions experienced by the public.

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There has been no significant increase in consumer confidence.

Huda highlighted that the Consumer Confidence Index (IKK), released by Bank Indonesia, has shown a downward trend since the beginning of the year. Year-on-year growth for the IKK in April, May, and June 2026 was recorded at 1.0%, 2.9%, and 0.0% respectively. "There has been no significant increase in consumer confidence," Huda stated, indicating a lack of substantial growth in public consumption.

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So the retail sector experienced a sharp decline, yet the government claims high growth in the retail sector.

Further contradicting the official narrative, Huda pointed to the retail sector's reported growth of 6.39%, significantly higher than the previous year's 5.38%. However, the Real Sales Index (IPR) from Bank Indonesia showed a decline in April, May, and June 2026 compared to both the previous year and the first quarter of 2026. Sales dropped by 3.67% in April, 3.89% in May, and 4.44% in June. "So the retail sector experienced a sharp decline, yet the government claims high growth in the retail sector," Huda remarked.

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When it's below 50, companies do not expand their business, which means additional production will be very minimal.

Huda also questioned the government's claims regarding the delivery of commercial vehicles for village cooperatives, noting their small volume and minimal value addition to the domestic industry due to being imported. He criticized the BPS data showing 5.32% growth in the non-oil and gas processing industry, deeming it inconsistent with the Purchasing Managers' Index (PMI) for manufacturing, which hovered around the expansionary threshold of 49.1 in April, 50 in May, and 46.9 in June. "When it's below 50, companies do not expand their business, meaning additional production will be very minimal," Huda explained. He also raised concerns about fixed capital formation being dominated by imported vehicles, potentially harming the domestic automotive industry and encouraging continuous imports.

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This could be our justification for continuous imports.