Indonesia's Economy Solid in Q1 2026, Driven by Consumption and Investment

Indonesia's economy demonstrated solid fundamentals in the first quarter of 2026, expanding by 5.61% year-on-year. This growth was primarily propelled by robust household consumption, which constitutes over half of the national economy. The Central Statistics Agency (BPS) reported that household consumption grew by 5.52%, contributing 2.94 percentage points to the overall economic expansion.

Amalia Adininggar Widyasanti, head of BPS, highlighted that public purchasing power remained strong, bolstered by increased mobility during the Ramadan and Eid al-Fitr holidays. This surge in consumption was evident in heightened activity across trade, transportation, restaurants, and hotels, as well as digital economic transactions during the extended holiday period.

Investment also played a crucial role, with gross fixed capital formation growing by 5.96%. This sector contributed 1.79 percentage points to the economic growth. Widyasanti noted that investment growth was supported by a rise in demand for capital goods, such as machinery and equipment, essential for production activities and business expansion. The data showed a 14.27% increase in capital goods imports, a 7.2% growth in foreign and domestic investment realization, and a significant 36.7% increase in government capital expenditure.