Jakarta. Indonesia faces another year of roughly 5% economic growth in 2026, with global uncertainty, heavy exposure to China, and weakening household demand limiting the outlook despite government efforts to lift expansion.

Most forecasters see little acceleration next year. The Institute for Development of Economics and Finance (Indef) expects growth to remain near 5%, a view broadly shared by major banks and research institutes that see only marginal improvement at best. The World Bank also projects growth holding around that level in 2026, supported by state-led investment, easier monetary conditions and foreign capital inflows, while warning that household spending will contribute less as real wages remain under pressure.

Bank Indonesia Governor Perry Warjiyo has outlined a slightly wider growth range for 2026, while Finance Minister Purbaya Yudhi Sadewa has acknowledged that the government’s 5.4% target may still fall short of what is needed to absorb a steadily expanding workforce.

Indef Executive Director Esther Sri Astuti attributes the growth ceiling to increasing global uncertainty. Geopolitical conflicts, China’s economic slowdown and the fragmentation of global trade are weighing on exports, capital flows and the rupiah. “Indonesia’s dependence on the global economy is very high,” Esther said, warning that external shocks are quickly transmitted to domestic conditions.

Those risks are compounded by a weakening global outlook. The OECD and IMF expect world growth to slow toward 3%, or slightly below, in 2026 as US-China trade tensions persist and supply chains remain fragile. Permata Bank Chief Economist Josua Pardede said China’s slowdown, combined with rising trade frictions with the US, could drag on growth in Southeast Asia’s largest economy.

Indonesia’s deepening reliance on China amplifies that exposure. China absorbs about 22%–23% of Indonesia’s non-oil exports and supplies roughly 40% of its non-oil imports, while ranking as the country’s third-largest investor. According to Celios economist Muhammad Zulfikar, Indonesia is particularly vulnerable in nickel, where Chinese demand and dominance in processing directly influence prices, output and investment.

“Indonesia is more dependent on China than five years ago and China could remain Indonesia’s single biggest economic partner next year. But Indonesia is also trying to diversify,” Zulfikar said. 

At home, consumption — which accounts for more than half of GDP — is losing momentum. Indef said higher food and energy prices and weak purchasing power have pushed consumption’s share of GDP closer to 50%, from around 60% previously. 

CORE Indonesia Executive Director Mohammad Faisal said there are few signs of optimism for 2026, warning that conditions could even deteriorate compared with 2025. 

“Net exports are likely to decline, while government spending, household consumption and investment may see only marginal increases,” he said. “Because the gains are modest, they are unlikely to offset the contraction in net exports.”