Indonesia's Q2 2026 Economic Growth Driven by Manufacturing and Consumption

Indonesia's economy expanded by 5.29 percent in the second quarter of 2026, primarily fueled by the manufacturing industry and robust household consumption. However, this growth rate marks a slight deceleration from the 5.61 percent recorded in the previous quarter. The Central Statistics Agency (BPS) reported that the manufacturing sector was the largest contributor, accounting for 0.90 percent of growth with a year-on-year expansion of 4.52 percent. Other significant contributors included the trade, construction, and information and communications sectors.

On the demand side, household consumption was the main driver, contributing 2.67 percent to the overall growth. This aligns with a 5.06 percent year-on-year increase and continues to represent the largest share of the GDP at 53.32 percent. Gross fixed capital formation and government consumption also supported economic expansion, while net exports saw a slight contraction.

These figures emerge against a backdrop of projected global economic growth of 3.0 percent for 2026, according to the International Monetary Fund (IMF). The IMF anticipates that developing economies will outpace global growth, expanding by 3.8 percent. However, inflation in these nations is also expected to be higher than the global average.

Looking at Indonesia's major trading partners, Vietnam and Malaysia showed strong annual growth. Singapore and South Korea also experienced growth compared to the previous year, though their pace slowed from the first quarter of 2026. In contrast, the U.S. economy showed stagnant growth compared to the second quarter of 2025, and China's growth also slowed.

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Indonesia's 5.29 percent growth in the second quarter of 2026 is driven primarily by the manufacturing industry and household consumption, according to Statistics Indonesia (BPS), down compared to last quarter at 5.61 percent year-on-year (yoy).