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🇮🇩 Indonesia /Economy & Trade

Seasonal Factors Boost Indonesia's Q2 2026 Economic Growth, Lawmakers Warn of Manufacturing Slowdown

From Republika · () Indonesian

Translated from Indonesian, summarized and contextualized by DistantNews.

At a glance

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  • Indonesia's economy grew 5.29% year-on-year in the second quarter of 2026, boosted by seasonal factors like school holidays and year-end festivities.
  • Sectors such as accommodation, food, beverages, and telecommunications saw significant growth, while the manufacturing industry experienced a slowdown.
  • The government is urged to monitor the declining growth in the manufacturing and agriculture sectors, which are crucial for employment and GDP.

Indonesia's economy expanded by 5.29% year-on-year in the second quarter of 2026, with seasonal factors playing a significant role in the growth. The school holidays in July, coupled with the start of the new academic year, contributed to a substantial 10.6% rise in the accommodation, food, and beverage sectors.

Telecommunications also saw a healthy increase, growing by 6.97%. The energy sector, encompassing electricity and gas, experienced a notable 10.81% growth, partly driven by increased demand for air conditioning during the dry season and rising gas prices due to geopolitical conflicts.

The school holiday period in July also contributed significantly to the growth of the accommodation, food, and beverage sectors, which grew 10.6% (yoy).

— Said AbdullahExplaining the impact of seasonal factors on economic growth.

However, the Banggar DPR (House of Representatives Budget Committee) has cautioned the government about a slowdown in the manufacturing industry. This sector, which contributes 18.5% to GDP and employs 13.5% of the national workforce, saw its growth decrease from 5.04% in the first quarter to 4.52% in the second quarter.

The government needs to be aware of this because the manufacturing industry contributes 18.5 percent to gross domestic product (GDP), is a contributor to 13.5 percent of the national workforce, and reflects the majority of the formal workforce.

— Said AbdullahHighlighting the importance of the manufacturing sector and the concern over its slowdown.

Similarly, the agriculture sector's growth decelerated to 3.81% in the second quarter, down from 4.97% in the first quarter, despite a recent synchronized rice harvest. This sector is strategically important, accounting for 13.57% of GDP and employing 28.75% of the national labor force.

On the demand side, household consumption growth moderated to 5.05% in the second quarter, compared to 5.52% in the first quarter, which was boosted by the Eid al-Fitr travel momentum. Despite this slight slowdown, household consumption remains a strong pillar, supporting 53.3% of GDP. Gross fixed capital formation and exports also showed positive growth, with PMTB increasing by 6.87% and exports rising by 4.13%, a significant improvement from the 0.9% export growth in the first quarter.

In the midst of geopolitical turmoil and global economic uncertainty, we are grateful that the national economy is still growing at 5.29 percent.

— Said AbdullahExpressing gratitude for the overall economic performance.
DistantNews Editorial

Originally published by Republika in Indonesian. Translated, summarized, and contextualized by our editorial team with added local perspective. Read our editorial standards.

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