Jakarta. Indonesia’s economy likely grew less than 5% in the second quarter of 2026 as a high base effect, a weaker rupiah and elevated energy prices weighed on household purchasing power and production costs, according to the Institute for Economic and Social Research at the University of Indonesia’s Faculty of Economics and Business (LPEM FEB UI).

LPEM FEB UI estimates gross domestic product expanded 4.80% year-on-year in the April-June period, with growth expected to range between 4.78% and 4.82%.

The Central Statistics Agency (BPS) is scheduled to release official second-quarter GDP data on Wednesday, Aug. 5.

The forecast would mark a slowdown from the 5.12% growth recorded in the second quarter of 2025, creating a significant high-base effect that makes annual growth harder to sustain.

“Although the economic growth figure in the first quarter of 2026 still raises several questions, we estimate Indonesia’s economic growth in the second quarter of 2026 will be below 5%,” Teuku Riefky, a macroeconomist and financial market economist at LPEM FEB UI, said in a report published by the research institute.

Riefky said the second quarter also lacked a significant seasonal boost because Ramadan and the Eid al-Fitr holiday fell in the first quarter this year. In 2025, the holidays fell in the second quarter and helped support consumption during the period.

External pressures also weighed on the economy. Higher energy prices and a weaker rupiah fueled imported inflation, increasing production costs for businesses. The rupiah has weakened by more than 8% so far this year, hovering around Rp 18,000 to the dollar, its lowest level since the 1998 Asian financial crisis.

The government’s decision to raise the price of Pertamax, a widely used non-subsidized gasoline brand, also put pressure on household purchasing power by increasing transportation and other consumer costs.

LPEM FEB UI expects Indonesia’s economy to grow around 5% for the full year, with its forecast ranging between 4.95% and 5.05%.

The projection is broadly in line with forecasts from several international institutions, although it is below the government’s more ambitious target.

The government has set a 5.4% economic growth target in the 2026 state budget, while Bank Indonesia projects growth in a range of 4.9% to 5.7%.

The International Monetary Fund expects Indonesia’s economy to remain resilient and expand 5% this year, while the World Bank has also forecast 5% growth. S&P Global Ratings has a slightly higher projection of 5.1%.