Jakarta. Nearly two years into President Prabowo Subianto's administration, Indonesia's economy is growing at a faster pace, but economists say the expansion has yet to translate sufficiently into higher-quality jobs and stronger household purchasing power.

Indonesia's economy grew 5.11% in 2025, accelerating from 5.03% in 2024, according to the Central Statistics Agency (BPS). Growth strengthened further to 5.45% in the first half of 2026, including 5.29% year on year in the second quarter.

However, Center of Reform on Economics (CORE) Indonesia Executive Director Mohammad Faisal said the stronger headline growth had not been accompanied by a sufficiently significant improvement in the quality of employment.

He pointed to Indonesia's labor structure, where informal employment continues to account for the majority of jobs, affecting wages and ultimately household purchasing power.

“Most workers, or 59%, are still employed in the informal sector,” Faisal said.

“This also affects wage levels and ultimately purchasing power, which is why we continue to see a shrinking middle class whose purchasing power has yet to recover,” he added.

Official employment figures illustrate the challenge. BPS recorded 147.67 million employed people in February 2026, an increase of around 1.90 million from a year earlier. However, informal workers increased to 87.74 million from 86.58 million, while formal employment rose to 59.93 million from 59.19 million.

The average monthly wage for employees stood at Rp 3.29 million in February.

Prabowo, who took office in October 2024, has set an ambition of lifting Indonesia's economic growth to as high as 8%.

Faisal said the economy had shown some acceleration during Prabowo's first two years in office, but its current trajectory remained well below that ambition.

“If we look at the achievements over the past two years, there has indeed been some acceleration, but we are still far from the ambition of growth above 6% and eventually 8%,” Faisal said.

Growth above 5% ‘Not Enough’
Achmad Nur Hidayat, an economist at Universitas Pembangunan Nasional Veteran Jakarta, similarly said Indonesia had maintained economic stability during nearly two years of the Prabowo administration but had yet to achieve the acceleration required to approach 8% growth.

He argued that maintaining growth slightly above 5% should not in itself be considered a major achievement.

“The much more important question is whether that growth is strong enough to take Indonesia toward the 8% target, create quality jobs, increase people's incomes and generate economic momentum across the regions,” Achmad said.

“After nearly two years, the government's challenge is no longer simply to keep the economy growing at around 5%. The government needs to explain where the additional nearly three percentage points of growth will come from over the next three years,” he added.

Achmad, however, pointed to investment as one area where the government had delivered stronger results.

Indonesia recorded Rp 1.93 quadrillion ($108.3 billion) in realized investment in 2025, exceeding the government's target. In the first half of 2026, investment reached Rp 1.01 quadrillion, equivalent to 49.5% of the full-year target of Rp 2.04 quadrillion.

Investment associated with downstream processing reached Rp 300.1 trillion in the first half of 2026, accounting for nearly 30% of total investment.

“This is a positive development. Indonesia should not continue indefinitely to export raw materials,” Achmad said.

He cautioned, however, that investment performance should not be judged solely by the amount of capital entering the economy.

The government, he said, should also assess how much investment translates into quality employment and higher worker incomes.

Official Investment Ministry data show that realized investment in the first half of 2026 was associated with nearly 1.45 million direct jobs.

Achmad also pointed to Prabowo's campaign-era pledge to create 19 million jobs, arguing that the government should provide more detailed information allowing the public to assess progress not only by the number of jobs created but also by their quality.

“The government needs to publish an official dashboard explaining how many genuinely new jobs have been created, how many are in the formal sector, how many provide decent wages and which sectors are creating them,” he said.

Such transparency, Achmad said, would make it easier to assess whether Indonesia's rising investment is translating into better employment opportunities and improvements in workers' welfare.

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