Indonesia’s 2026 Growth Target of 5.4% Seen Within Reach, Citi Says
Jakarta. Indonesia’s target of 5.4 percent economic growth in 2026 remains realistic, according to Citi Indonesia, as a low base effect and stronger fiscal spending are expected to support the outlook.
Chief Economist Helmi Arman said Tuesday that the government’s assumption, outlined in the 2026 draft state budget, could be achieved despite current headwinds.
“I think 5.4 percent is still attainable because next year we should not forget there is a low-base effect from 2025,” Helmi said at a press briefing in Jakarta’s Sudirman district on Tuesday.
Indonesia’s economy is projected to expand around 5 percent this year, close to the government’s official target of 5.2 percent. Citi previously forecast growth to slow to 4.7 percent in 2025, before picking up momentum in 2026.
Helmi said fiscal conditions will likely improve as government spending normalizes after delays earlier this year. A stronger budget stimulus in 2026 is expected to further reinforce growth.
One of the key drivers, he added, is downstream resource processing, a sector President Joko Widodo has pushed aggressively in recent years to boost value-added exports. Agriculture has also surprised on the upside in 2025, contributing significantly to GDP growth in the first half of the year, thanks to bumper harvests of rice and corn.
In April, state logistics agency Bulog absorbed 1.3 million tons of rice from farmers, helping stabilize prices and support rural incomes. Agriculture and forestry also played an outsized role in job creation.
Indonesia’s growth accelerated to 5.12 percent year-on-year in the second quarter of 2025, up from 4.87 percent in the first quarter, beating many forecasts. Helmi acknowledged Citi had underestimated both the scale of downstream processing output and agricultural resilience.
“The miss in our forecast came from the first wave of output in downstream industries, where the data was not yet available, and also from us underestimating agriculture,” he said.
With a stronger fiscal push, resilient commodities, and downstream expansion, Indonesia now has a credible shot at hitting its 5.4 percent growth target in 2026, Citi said.
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